Discover Financial Services Inc. (NYSE:DFS) shares are trading lower Monday as concerns over antitrust scrutiny weighed on the company’s proposed merger with Capital One Financial (NYSE:COF).
What To Know: The drop followed reports the U.S. Department of Justice is reviewing the $35.3 billion all-stock acquisition over potential anti-competitive risks, particularly in the subprime lending sector.
According to Investing.com, Capital Forum reported that DOJ staff may oppose the deal, raising concerns that it could limit competition for subprime borrowers.
A Bloomberg Intelligence analyst noted that while regulatory opposition does not necessarily mean the deal will be blocked, the DOJ's stance could create significant hurdles.
Capital One defended the acquisition, stating the deal complies with the Bank Merger Act's legal requirements and remains well-positioned for approval.
The merger, if completed, would strengthen the companies’ ability to compete against Mastercard, Visa and American Express. However, the heightened regulatory scrutiny has cast uncertainty over its approval, leading to a selloff in both stocks.
DFS Price Action: Discover Financial Services shares closed down 6.86% at $152.99 at publication Monday, according to Benzinga Pro.
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