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Capital One to Buy HSBC’s Credit Card Operations for $2.6 Billion (COF, HBC)

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.

Be sure to visit our complete recommended list of the Best Dividend Stocks , as well as a detailed explanation of our ratings system here .

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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