Discover Financial Services (DFS.N) or Capital One Financial (COF.N) have agreed to a termination fee of $1.38 billion if their proposed merger encounters specified obstacles, as outlined in a regulatory filing released on Thursday.
The merger, an all-stock transaction revealed on Monday, is poised to establish the largest credit card issuer in the United States.
Additionally, it positions Capital One to leverage Discover’s payment network, thereby reducing its dependence on industry behemoths Visa (V.N) and Mastercard (MA.N).
Capital One, currently the third-largest issuer of Visa and MasterCard credit cards in the U.S., anticipates that transitioning its card portfolio from these two payment giants to Discover’s network will yield $1.2 billion in revenue by 2027.
