In a significant move that will likely reshape the landscape of the U.S. banking and credit card industries, Capital One Financial has announced plans to acquire Discover Financial for $35.3 billion. This transaction will merge two of the nation’s premier lenders and credit card issuers, creating the sixth-largest bank in the United States.

“Our acquisition of Discover is a singular opportunity to bring together two very successful companies with complementary capabilities and franchises, and to build a payments network that can compete with the largest payments networks and payments companies,” said Richard Fairbank, founder, Chairman and Chief Executive Officer of Capital One.

Under the terms of the current agreement, Discover shareholders will receive 1.0192 Capital One shares for each Discover share, representing a premium of 26.6% based on Discover’s closing price of $110.49 on Feb 16. At close, Capital One shareholders will own approximately 60% and Discover shareholders will own approximately 40% of the combined company.

Michael Rhodes, CEO and president of Discover, said the agreement “underscores the strength of our business and is a testament to the hard work of Discover employees. We look forward to a bright future as part of the Capital One family and to providing expanded opportunities for our loyal customers.”

Discover ranks as the smallest among the four major US credit card networks, trailing behind Visa, Mastercard, and American Express. It currently serves 70 million merchants across more than 200 countries.

The companies are hosting a joint conference call Tuesday morning. The transaction is anticipated to be finalized between late 2024 and early 2025.