Capital One Has an Uphill Task With Regulators on Discover Deal
Stock market signals investor skepticism that the takeover will clear all the necessary hurdles.
Will bigger be better for borrowers?
Photographer: Luke Jarmey/Cavan Images RFWhen Capital One Financial Corp. announced its agreement to buy Discover Financial Services in February, investors worried the deal may not pass muster with regulators. “Obviously, it’s a pretty intense regulatory backdrop for deals of this size,” came the very first question on their call with executives. “I’m just curious: What got you comfortable to move forward, and if you have had any preliminary conversations with regulators?”
The response was non-committal. “We believe that we are well positioned for approval, but of course, we can’t discuss our conversations with our regulators,” replied Richard Fairbank, founder, chairman, chief executive officer and president of Capital One.