RIVERWOODS, Ill. & LONDON--(BUSINESS WIRE)--Feb. 7, 2008--Discover
Financial Services (NYSE:DFS) and Barclays Bank PLC announced today
that the companies have signed a definitive agreement for Barclays to
acquire Discover's Goldfish credit card business based in the United
Kingdom.
Under the agreement, Barclays will acquire the card portfolio
consisting of 1.7 million Goldfish and affinity card accounts with
approximately $4 billion (GBP 2 billion) of receivables; the Goldfish
brand; its operating facilities; certain legal entities; and staff.
The aggregate sale price of the business is approximately $70
million (GBP 35 million), payable in cash at closing and subject to a
post-closing adjustment. Discover expects it will record after-tax
charges of between $190 million and $210 million in the first quarter
associated with the transaction. The company believes that exiting the
U.K. card business will positively impact earnings in the second
quarter of 2008 and for the remainder of the year. Cash and capital
will become available for general corporate purposes as a result of
the divestiture.
"While we have begun to see important progress in our U.K.
business, the funding and operating environment there continues to be
a challenge. We have concluded that the best way to maximize
shareholder value is through the sale of the Goldfish business," said
David Nelms, chief executive officer of Discover. "The sale will free
up capital, enhance Discover's net income and bring even sharper focus
to our profitable and growing U.S. Card and Third-Party Payments
businesses."
Antony Jenkins, chief executive of Barclaycard, said: "Barclaycard
is one of the largest card issuers in the U.K. with acknowledged
expertise in risk management, customer data management and marketing.
Goldfish has similar credit characteristics to our existing U.K.
business. The combination provides an attractive opportunity to deploy
our expertise across a larger number of cards and customers."
The transaction is expected to close by the end of Discover's
second quarter, subject to regulatory approvals in the U.K. and to
other closing conditions.
Additional information regarding the transaction will be available
in a Form 8-K that will be filed by Discover with the Securities and
Exchange Commission.
About Discover Financial Services
Discover Financial Services (NYSE:DFS) is a leading credit card
issuer and electronic payment services company with one of the most
recognized brands in U.S. financial services. The company operates the
Discover Card, America's cash rewards pioneer. Since its inception in
1986, the company has become one of the largest card issuers in the
United States. Its payments businesses consist of the Discover
Network, with millions of merchant and cash access locations, and
PULSE, one of the nation's leading ATM/debit networks. For more
information, visit www.discoverfinancial.com.
About Barclays
Barclays is a major global financial services provider engaged in
retail and commercial banking, credit cards, investment banking,
wealth management and investment management services with an extensive
international presence in Europe, the USA, Africa and Asia. With over
300 years of history and expertise in banking, Barclays operates in
over 50 countries and employs over 127,000 people. Barclays moves,
lends, invests and protects money for over 27 million customers and
clients worldwide. For further information about Barclays, please
visit http://www.barclays.com.
This press release contains forward-looking statements within the
meaning of the Private Securities Litigation Reform Act of 1995. Such
statements are based upon the current beliefs and expectations of
Discover Financial Services' management and are subject to significant
risks and uncertainties. Actual results may differ materially from
those set forth in the forward-looking statements. The following
factors, among others, could cause actual results to differ materially
from those set forth in the forward-looking statements: the actions
and initiatives of current and potential competitors; our ability to
manage credit risks and securitize our receivables at acceptable
rates; changes in economic variables, such as the number and size of
personal bankruptcy filings, the rate of unemployment and the levels
of consumer confidence and consumer debt; the level and volatility of
equity prices, commodity prices and interest rates, currency values,
investments and other market indices; the availability and cost of
funding and capital; access to U.S. or U.K. debt and securitization
markets; the ability to increase or sustain Discover Card usage or
attract new cardmembers and introduce new products or services; our
ability to attract new merchants and maintain relationships with
current merchants; material security breaches of key systems;
unforeseen and catastrophic events; our reputation; the potential
effects of technological changes; the effect of political, economic
and market conditions and geopolitical events; unanticipated
developments relating to lawsuits, investigations or similar matters;
the impact of current, pending and future legislation, regulation and
regulatory and legal actions; our ability to attract and retain
employees; the ability to protect our intellectual property; the
impact of our separation from Morgan Stanley; the impact of any
potential future acquisitions; investor sentiment; and the
restrictions on our operations resulting from indebtedness incurred
during our separation from Morgan Stanley.
These forward-looking statements speak only as of the date of this
press release, and there is no undertaking to update or revise them as
more information becomes available. Additional factors that could
cause Discover Financial Services' results to differ materially from
those described in the forward-looking statements can be found in the
Company's Form 10, as amended, filed with the SEC and available at the
SEC's internet site (http://www.sec.gov).
CONTACT: Discover
Craig Streem, +1-224-405-3575 (Investors)
Leslie Sutton, +44 (0)203 162 6656 (Media)
Jon Drummond, +1-224-405-1888 (Media)
or
Barclays
Mark Merson, +44 (0)20 7116 5752 (Investors)
Neil Temple, +44 (0)20 7116 2928 (Investors)
Alistair Smith, +44 (0)207 7116 6132 (Media)
or
Barclaycard
James Cooke, +44 (0)1604 251 229 (Media)
SOURCE: Discover Financial Services