Dive Brief:

• Discover Financial Services said it now expects to finalize its proposed merger with Capital One Financial by May 19, three months later than originally planned as the companies wait on regulators to give the deal a green light, according to a regulatory filing Monday. Initially, they expected to consummate the transaction by Feb. 19, according to the merger agreement filed with the Securities and Exchange Commission last year.
• The credit card network also provided an update about ongoing lawsuits seeking to derail the merger in the latest SEC filing, though it considers those cases meritless.
• “As a result of the closing conditions related to the requisite regulatory approvals not yet having been satisfied, the outside date under the Merger Agreement will be automatically extended to May 19, 2025,” the filing said.

Dive Insight:

Discover also reiterated in the filing that a special shareholder meeting to vote on the merger had been scheduled for next Tuesday. “The extension of the outside date is standard practice in large bank transactions and was contemplated from the outset in the original Merger Agreement,” a Capital One spokesperson said in an email when asked for comment. “We remain well-positioned to complete the acquisition in early 2025, subject to shareholder and regulatory approval.”

McLean, Virginia-based Capital One proposed the $35 billion acquisition of Riverwoods, Illinois-based Discover on Feb. 18, 2024. When the acquisition proposal was announced, the companies said they expected to complete the transaction by "late 2024 or early 2025," according to the initial press release.

The deal is the subject of three lawsuits seeking to block the companies from merging on the grounds that the acquisition would harm consumers by giving them fewer options, according to Discover’s filing.

“The Matters each allege that, among other things, the joint proxy statement/prospectus contains certain disclosure deficiencies and/or incomplete information regarding the Mergers,” Discover’s Monday filing said.

The New York Attorney General’s office is also probing the proposed acquisition to determine the impact on consumers.

The filing said the companies were adding disclosures to previous proxy filings to “to minimize the costs, risks and uncertainties inherent in litigation, and without admitting any liability or wrongdoing,” Monday’s filing said.

One additional disclosure, for example, said that Discover would establish a cash retention program for executives impacted by the merger.

When asked what regulatory approvals are still needed, a Discover spokesperson referred to a Dec. 19 news release that said the Office of the Delaware State Bank Commissioner approved the deal, but the companies were still waiting for approval from the Board of Governors of the Federal Reserve System and the Office of the Comptroller of the Currency.

A spokesperson for the Federal Reserve declined to comment while a spokesperson for the Treasury Department, which oversees the Office of the Comptroller of the Currency, did not respond to a request for comment.

Critics argue — among other things — that the merger will hurt low-income borrowers by giving the combined company a significant chunk of the market for subprime credit cards, although Capital One and Discover insist they won’t raise prices for those cardholders.