Pressures on major mergers and acquisitions could collapse blockbuster Capital One-Discover deal.
Mergers and acquisitions (M&A) are an integral a part of investment banking infrastructure, but pressure on major moves could cost prospective business ventures at the very best level.
Capital One and Discover’s blockbuster banking deal is one such merger that faces intense pressure from advocacy groups to scrutinize the nice print.
The $35.3B deal would allow the banking giant Capital One to soak up one among the credit world’s best-known assets in Discover, after a turbulent 2023. Nevertheless, 30 advocacy groups have spoken out and urged the Justice Department to step in to kick the tires.
A letter from the advocacy groups, postmarked March 21, starkly reads; “Dear Chair Powell, Acting Comptroller Hsu, and Assistant Attorney General Kanter:
We urge the Board of Governors of the Federal Reserve System (Federal Reserve), Office of the Comptroller of the Currency (OCC), and the Department of Justice to maneuver quickly to start a full and transparent review of the proposed Capital One Financial Corporation acquisition of Discover Financial Services that gives ample opportunity for the general public to have interaction and comment on the proposed merger.”
Capital One keeps confidence
Capital One stays buoyant, expecting the deal to shut by the top of 2024, however the letter’s thirty authors have asked for certain items to be adhered to publicly:
- The Federal Reserve and the OCC should prohibit streamlined application or expedited review for the proposed merger.
- The Federal Reserve and the OCC should extend the general public comment period to at the very least sixty day.
- The Federal Reserve and the OCC should hold a public hearing on the proposed merger.
- The Federal Reserve and the OCC should disclose any pre-filing discussions with the merging parties.
- The Department of Justice should fully evaluate the proposed merger under the 2023 merger guideline.
- The Department of Justice should make the competitive aspects report available to the general public.
If the deal does undergo then Capital One’s owner, McClean can be greater than JPMorgan Chase and would snap up one among the most important bank card distributors in the US. Capital One would quadruple their variety of existing customers after swallowing up the 305 million additional cardholders in response to the Recent York Times.
Discover released a February statement in regards to the acquisition, with recent CEO and President of Discover, Michael Rhodes stating that the “transaction with Capital One brings together two strong brands with enhanced ability to speed up growth and maximizes value for our shareholders, enabling them to participate in the tremendous upside of the combined company,”
“This agreement underscores the strength of our business and is a testament to the exertions of Discover employees. We stay up for a vivid future as a part of the Capital One family and to providing expanded opportunities for our loyal customers.”
It stays to be seen if the move will likely be stalled or sail through, but Captial One believes it can with its dedicated approach to the formal application process that was made to the Office of the Comptroller of the Currency on the identical day because the letter from the advocacy groups reached the Federal Reserve Chair Powell, Acting Comptroller of the Currency Hsu and DOJ’s Antitrust Division Assistant Attorney General Kanter.
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