Discover Financial Services to Acquire Diners Club International
April 9, 2008
According to UPI, Discover Financial Services said it will acquire Diners Club International from Citigroup Inc. for $165 million in cash. The deal, expected to close in 90 days, gives Discover a much-needed international presence. This means that in a couple years, people with Discover cards will get to use their cards when they travel abroad.
The deal announced Monday comes as Discover tries to become accepted more outside the United States and among big corporate spenders, and as Citigroup sheds businesses it considers non-essential to raise cash and lower costs. Both companies have had a rough time over the past several months with deteriorating consumer credit conditions in the United States and the United Kingdom.
The Diners Club card came into being in 1950, when businessman Frank McNamara issued the charge card for people to use at restaurants in New York City. In the ensuing decades, Diners Club ballooned into a brand accepted at more than 8 million locations in 185 countries -- and used particularly among the corporate jet-setting crowd.
It is reported that Discover is taking over Diners Club's payment network, brand and license agreements. It will not be providing credit to the Diners Club cardholders. That lending will continue to be done by the existing institutions that issue Diners Club cards, including Citigroup. Rather, Discover will be making money by processing the transactions.