Discover Financial Services has achieved a
significant strategic breakthrough with the signing of an agreement
to acquire Diners Club International, the global payments card
issuing unit of financial services conglomerate Citigroup.
significant strategic breakthrough with the signing of an agreement
to acquire Diners Club International, the global payments card
issuing unit of financial services conglomerate Citigroup.
For the US payments service provider the $165
million cash deal with Citigroup will enable it to achieve
worldwide acceptance of its Discover Network payment cards. At
present the cards are effectively confined to the US market, where
it has the third largest merchant network.
million cash deal with Citigroup will enable it to achieve
worldwide acceptance of its Discover Network payment cards. At
present the cards are effectively confined to the US market, where
it has the third largest merchant network.
Encapsulating the significance of the deal
Discover CEO David Nelms said: “We expect this acquisition to
significantly improve our competitive position by giving us global
reach and accelerating growth in our payments network
revenues.”
Discover CEO David Nelms said: “We expect this acquisition to
significantly improve our competitive position by giving us global
reach and accelerating growth in our payments network
revenues.”
Under the terms of the deal Discover will
acquire Diners Club’s network with more than $30 billion per year
in transaction volume outside of North America, its brand and
trademarks, its staff and agreements with 44 network licensees who
issue Diners Club cards, and maintain an acceptance network
consisting of more than 8 million merchant and cash access
locations in 185 countries.
acquire Diners Club’s network with more than $30 billion per year
in transaction volume outside of North America, its brand and
trademarks, its staff and agreements with 44 network licensees who
issue Diners Club cards, and maintain an acceptance network
consisting of more than 8 million merchant and cash access
locations in 185 countries.
While not included in the announced deal with
Citigroup, Diners Club’s assets and employees in France are
expected to be included shortly.
Citigroup, Diners Club’s assets and employees in France are
expected to be included shortly.
Over the next two to three years, Discover will
integrate both networks to allow Discover cardholders to use their
cards at merchants that accept Diners Club and Diners Club
cardholders to use their cards on the Discover Network throughout
North America.
integrate both networks to allow Discover cardholders to use their
cards at merchants that accept Diners Club and Diners Club
cardholders to use their cards on the Discover Network throughout
North America.
In a conference call Nelms said that during the
integration process Diners Club will still make a positive annual
contribution of between $10 million and $15 million in pre-tax
profit.
integration process Diners Club will still make a positive annual
contribution of between $10 million and $15 million in pre-tax
profit.
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