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Key Takeaways

• Capital One Financial 's proposed $35 billion acquisition of Discover Financial Services won't be challenged on antitrust grounds by the U.S. Justice Department, The New York Times reported Thursday.

• Both companies' stock rose briefly at midday Thursday on the news but later resumed a decline as part of a broader market sell-off in reaction to President Donald Trump's tariff plans.

• The merger would create a giant payments network and credit card issuer, as well as a business with more than 100 million customers.

Capital One Financial's (COF) plans to buy Discover Financial Services (DFS) doesn't raise enough concerns about competition to prompt the Justice Department to block the deal, The New York Times reported Thursday.

The news removes one potential roadblock for the proposed $35 billion merger of two of the U.S.'s largest credit card companies. The Federal Reserve or the Office of the Comptroller of the Currency could still block the deal, although they are generally viewed as less likely to object, the Times reported.

Shares of Capital One and Discover shot up at midday Thursday after the report, though they were ultimately dragged lower amid a broad descent for stocks that began late Wednesday when President Donald Trump announced a fresh round of tariffs, prompting a broad market sell-off.

Capital One shares were recently down nearly 9% from Wednesday's close, while Discover's were off by about 7%, in line with a plunge in bank and financial services shares Thursday.

Capital One agreed to buy Discover for $35.3 billion in early 2024. The merger would create a payments network giant, a leading credit card issuer, and a business with more than 100 million customers.

Executives have estimated that the deal would generate $2.7 billion in pretax synergies and improve the merged company's earnings per share by 2027.

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