Discover Financial Services Announces Agreement to Sell Private Student Loan Portfolio
July 17 2024 - 8:13AM
Business Wire
Discover Financial Services (NYSE: DFS) announced today that
Discover Bank (“Discover”) has entered into an agreement to sell
its private student loan portfolio to one or more strategic
partnerships comprised of investment vehicles and accounts managed
by Carlyle (NASDAQ: CG) and KKR (NYSE: KKR) , with Firstmark
Services, a division of Nelnet (NYSE: NNI), assuming responsibility
for servicing the portfolio upon the sale.
As of June 30, 2024, the principal balance of the private
student loan portfolio was approximately $10.1 billion. The
purchase price payable to Discover in the transaction is at a
premium to the principal balance of the private student loan
portfolio and, based on certain assumptions, is expected to be up
to approximately $10.8 billion. The transaction is expected to be
completed in multiple closings by the end of 2024, subject to the
satisfaction or waiver of customary closing conditions.
Wells Fargo served as exclusive financial advisor, and Skadden,
Arps, Slate, Meagher & Flom LLP served as legal counsel to
Discover Financial Services in connection with the transaction.
About Discover
Discover Financial Services (NYSE: DFS) is a digital banking and
payment services company with one of the most recognized brands in
U.S. financial services. Since its inception in 1986, the company
has become one of the largest card issuers in the United States.
The company issues the Discover® card, America's cash rewards
pioneer, and offers personal loans, home loans, checking and
savings accounts and certificates of deposit through its banking
business. It operates the Discover Global Network® comprised of
Discover Network, with millions of merchants and cash access
locations; PULSE®, one of the nation's leading ATM/debit networks;
and Diners Club International®, a global payments network with
acceptance around the world. For more information, visit
www.discover.com/company.
Forward Looking Statements
Information in this communication, other than statements of
historical facts, may constitute forward-looking statements, within
the meaning of the Private Securities Litigation Reform Act of
1995. These statements include, but are not limited to, statements
about the benefits of the proposed transaction, statements related
to the expected timing of the completion of the transaction,
Discover’s plans, objectives, expectations and intentions, and
other statements that are not historical facts. Forward-looking
statements may be identified by terminology such as “may,” “will,”
“should,” “targets,” “scheduled,” “plans,” “intends,” “goal,”
“anticipates,” “expects,” “believes,” “forecasts,” “outlook,”
“estimates,” “potential,” or “continue” or negatives of such terms
or other comparable terminology.
All forward-looking statements are subject to risks,
uncertainties and other factors that may cause the actual results,
performance or achievements of Discover to differ materially from
any results expressed or implied by such forward-looking
statements. Such factors include, among others, (1) the risk that
the anticipated benefits from the transaction may not be fully
realized or may take longer than anticipated to be realized, if at
all, (2) disruption to Discover as a result of the announcement and
pendency of the transaction, (3) the risk that the separation,
transfer of servicing or sale of Discover’s private student loan
portfolio will be materially delayed or will be more costly or
difficult than expected or that Discover will otherwise be unable
to successfully separate, transfer servicing of or sell the private
student loan portfolio as a result of unexpected factors or events,
(4) the risk that a governmental entity may impose conditions that
could adversely affect Discover or the expected benefits of the
transaction or prevent the closing of the transaction, (5)
reputational risk and the reaction of Discover’s customers,
suppliers, employees or other business partners to the transaction,
(6) the ability to timely complete the transaction, including due
to the failure of a closing condition in the agreement to be
satisfied, or any unexpected delay in closing the transaction or
the occurrence of any event, change or other circumstances that
could give rise to the termination of the agreement, (7) the
possibility that the transaction may be more expensive to complete
than anticipated, including as a result of unexpected factors or
events, (8) risks related to management and oversight of the sale
and/or transfer of servicing of the private student loan portfolio,
(9) the outcome of any legal or regulatory proceedings that may be
currently pending or later instituted against Discover before or
after the transaction, (10) the level and volatility of interest
rates, other market fluctuations and other market indices, (11)
student loan portfolio amortization and composition and (12)
general competitive, economic, political and market conditions and
other factors that may affect future results of Discover.
Additional factors which could affect future results of Discover
can be found under “Risk Factors,” “Business - Competition,”
“Business - Supervision and Regulation” and “Management's
Discussion and Analysis of Financial Condition and Results of
Operations” in the company's Annual Report on Form 10-K for the
year ended December 31, 2023, which is filed with the SEC and
available at the SEC's internet site (http://www.sec.gov) and
subsequent reports on Forms 8-K and 10-Q. Discover disclaims any
obligation and does not intend to update or revise any
forward-looking statements contained in this communication, which
speak only as of the date hereof, whether as a result of new
information, future events or otherwise, except as required by
federal securities laws.
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version on businesswire.com: https://www.businesswire.com/news/home/20240717435319/en/
Investor Contact: Eric
Wasserstrom Investor Relations 224-405-4555
investorrelations@discover.com
Media Contact: Matthew
Towson Public Relations 224-405-5649 matthewtowson@discover.com
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