Your Evening Briefing: Capital One-Discover May Mark M&A Resurgence
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In the biggest deal of 2024 so far, Capital One agreed to buy Discover in a $35 billion all-stock deal to create the largest US credit-card company by loan volume. Now may come the hard part, however, as federal regulators scrutinize the deal for potential antitrust issues. Besides bringing together two storied consumer-finance brands, the combination would surpass rivals JPMorgan and Citigroup when it came to US credit-card loan volume. It would also give Capital One a foothold in the world of payment networks, allowing it to be less dependent on rivals Visa and Mastercard. Such a tie-up would arguably be even better for Discover, which posted a 62% drop in fourth-quarter profit amid the fallout from risk-management lapses that led to the resignation of its CEO. More broadly, the US is leading a revival in global mergers that many dealmakers didn’t think would emerge until later this year. Truist Financial is selling its insurance brokerage business in a deal valuing the asset at $15.5 billion and Walmart has agreed to acquire smart-TV maker Vizio for about $2.3 billion. These take the value of deals announced globally this year to roughly $425 billion—up 55% compared with this time last year. That’s good news for dealmakers working hard to put two consecutive years of falling values behind them. Chris Hughes writes in Bloomberg Opinion that the proposed Discover takeover by Capital One signals that after a miserable few years for M&A, companies are willing to take big swings again.
The US blocked a United Nations Security Council resolution backing a cease-fire in Gaza Tuesday, just as Israel prepares for an assault on the southern-Gaza city of Rafah, where over a million Palestinians have sought refuge. The US used its veto power on the vote while the UK abstained. Algeria, the only Arab nation currently on the security council, brought the resolution forward. The US has pushed its own plan for a temporary cease-fire and the release of all hostages held by the militant group Hamas, while also warning against an Israeli assault on Rafah unless arrangements are made for civilians there to be moved to relative safety.