Credit card issuer Capital One Financial Corp. ( COF ) on Wednesday announced it would acquire the credit card unit of British banking giant HSBC Holdings plc ( HBC ).
The sale of HSBC's $32.7 billion credit portfolio comes as part of the major overhaul underway at HSBC. The company aims to cut annual costs by some $3.5 billion.
Capital One said it would finance the deal using both cash and stock, with HSBC receiving up to $750 million worth of COF shares. The acquisition is slated to be completed by the second quarter of 2012.
Capital One shares rose $1.33, or +3.3%, in premarket trading Wednesday, while HSBC stock fell $1.15, or -2.5%.
The Bottom Line
Shares of Capital One Financial ( COF ) have a .49% dividend yield, based on last night's closing stock price of $40.82. The stock has technical support in the $36-$40 price area. If the shares can firm up, we see overhead resistance around the $45-$46 price levels.
Capital One Financial Corp. ( COF ) is not recommended at this time, holding a Dividend.com DARS™ Rating of 3.3 out of 5 stars. HSBC Holdings plc ( HBC ) is also not recommended, holding a Dividend.com DARS™ Rating of 3.1 out of 5 stars.
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