MCLEAN (dpa-AFX) - Capital One Financial Corp. (COF) Wednesday announced a $1.25 billion public offering of its common stock to help fund a portion of its acquisition of HSBC's U.S. credit card business.
As part of the Federal Reserve's 2012 stress tests, Capital One had submitted a capital plan detailing plans to raise common equity to support key acquisitions made in 2011. The plan included a $1.25 billion common equity to be raised by the end of the second quarter 2012.
As part of key acquisitions, McClean, Virginia-based Capital One last August agreed to acquire HSBC's U.S. credit care business for a premium estimated at $2.6 billion as at the end of June 2011.
Previously in June, Capital One agreed to acquire ING Direct business from ING Groep NV for $9 billion. The acquisition was completed last month.
Capital One said Morgan Stanley & Co. Llc, Barclays Capital Inc., Citigroup Global Markets Inc. and Credit Suisse Securities (USA) Llc are acting as book-running managers for its $1.25 billion common stock offering.
Looking ahead to the first quarter, Capital One expects earnings from continuing operations of at least $2.50 per share. The guidance includes an one-time gain of about $1.15 per share related to the ING Direct Acquisition.
Thomson Reuters analysts on consensus currently expect earnings of $1.37 per share for the quarter. Analysts' estimates typically exclude special items.
Capital One said it continues to target a Tier 1 common ratio in the mid-9 percent range at the end of the second quarter 2012. It expects Tier 1 common ratio at the end of the first quarter to be well above 11 percent.
COF closed Wednesday on the NYSE at $52.33, up $1.38 or 2.71%, on a volume of 9 million shares. In after hours, the stock lost $0.53 or 1.01%.
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