Capital One Financial Corp.’s $35 billion deal for rival credit card provider Discover Financial Services is more than an opportunistic move on a rival that had a lamentable 2023. The takeover reinforces the impression that corporate leaders are willing to take risks on big M&A again.

The logic of the tie-up is simple: scale. Much of Discover’s cost base in systems and marketing will become redundant. Acquiring Discover’s network also reduces its suitor’s reliance on Visa and Mastercard. Capital One pivots toward the prime end of credit card lending. It will become the largest issuer of credit card loans in the US and the transaction overall “makes a lot of sense strategically,” say analysts at Goldman Sachs Group Inc.