Capital One, in which Berkshire Hathaway owns 3.28%, has announced its intention to acquire Discover Financial Services, a US credit card issuer, in a deal that will be worth US$35.3bn. This strategic move is aimed at creating the largest credit card lender in the United States.

Although Discover's market value is nearly $28 billion, it remains smaller than its peers Visa, Mastercard and American Express. Integrating Discover, which issues its own credit cards, into Capital One's business gives the bank a significant advantage over competitors such as JPMorgan Chase, Bank of America and Citigroup, which do not process transactions directly. The transaction is expected to generate significant pre-tax synergies of $2.7 billion by 2027 through cost reductions and network efficiencies.

The transaction comes at a time when the credit card industry is thriving as more and more consumers are using card payments thanks to attractive rewards programs and a surge in e-commerce, which has been fueled largely by the pandemic.

The proposed acquisition, which is subject to strict antitrust scrutiny, would create the sixth-largest US bank by assets and make the combined entity a strong competitor to companies such as JPMorgan Chase and Citigroup. Upon completion of the transaction, Capital One shareholders will retain approximately 60% of the merged company, while Discover shareholders will own the remainder.