Discover Financial Services today announced that it would buy Diners Club International from Citi for $165 million, merging the networks to give Diners Club greater acceptance domestically and Discover greater acceptance internationally.
Under the terms of the agreement, the all-cash transaction, expected to close in the next 90 days pending regulatory approvals and closing conditions, will give Discover Diners Club International's network, brand, employees and agreements with 44 issuers. Integration of the networks will happen over the next two or three years. Citi, which said the sale was part of its strategy to focus on its card-issuing business, will remain a long-term issuer of Diners Club, per the agreement.
As a result, Diners Club, which deals largely in upscale, premium travel and entertainment card products, will broaden its acceptance in North America as cardholders can use the Discover Network. Likewise, Discover card users will be able to use their card abroad, accessing the Diners Club network. Discover does not have a dedicated corporate T&E card product, outside of one for its own employees, but does have a small business product that is used in some degree for business travel, said Discover Financial Services executive vice president Harit Talwar, who runs the Discover network.
Diners Club licensees are not included in the acquisition, and current Diners Club clients will keep their cards and all related benefits. Discover also will not issue cards or extend consumer credit in international markets through the acquisition. However, Diners Club's network of issuers as well as the benefits of its loyalty programs, including access to about 100 airport lounges, also will be a benefit, Talwar said.
"We're very excited by the merchant acceptance this will give us globally, but equally excited about the long list of franchisers, most of whom are banks, that offer a very strong footprint of global partnerships," Talwar said. "They have a long list of corporate customers, so being able to leverage all this brings an exciting set of opportunities."
Discover's acquisition marks the second major transaction in the corporate payments sphere in the past several weeks, following American Express' late March announcement of its acquisition of GE Money's corporate card unit
(BTNonline, March 27).