Ally to Sell International Operations to G.M. for $4.2 Billion
Ally Financial‘s international operations are about to find a new home — with the lender’s former parent, General Motors.
Ally agreed on Wednesday to sell its European and Latin American businesses, as well as a share of a joint venture in China, to G.M.’s financial arm for about $ 4.2 billion.
The sale is the latest effort by Ally to raise money to help pay back its government bailouts, made to help prop up a company struggling under the weight of souring mortgages. The Obama administration pumped money into the firm as part of its bailout of the auto industry in 2009.
Since then, Ally has stabilized, largely by focusing on its online banking operations. But it remains largely a ward of the federal government, which owns about 74 percent of the company’s common shares and $ 5.9 billion worth of convertible preferred securities.
(The Treasury Department has recovered about $ 5.9 billion from its investment in Ally thus far, largely by selling shares and receiving dividend payments.)
The lender has sought to go public, but struggled with what it said were unfavorable market conditions, delaying its efforts to repay the government. So it has turned to asset sales to raise cash, selling off a Mexican insurance division for $ 865 million and its Canadian arm for $ 4.1 billion.
But the sale of its remaining international operations is its biggest yet.
“Our goals were to find the best solution for each of the businesses, while also maximizing shareholder value, and we believe those goals have been achieved,” Michael A. Carpenter, Ally’s chief executive, said in a statement.
G.M., which sold Ally — then known as GMAC — six years ago, had long been considered the leading buyer of Ally’s international businesses. It is striking the deal through its G.M. Financial arm, built in part through its 2010 acquisition of AmeriCredit for $ 3.5 billion. Through Wednesday’s transaction, G.M. will add international financing operations.
The operations being sold include auto finance units in Germany, Britain and Brazil, totaling some $ 16.1 billion in assets.
“G.M. is entering the most aggressive rollout of new vehicles in its history, and this acquisition will make us an even more formidable competitor by ensuring that competitive financing is available to our customers and dealers around the world,” Dan Ammann, the company’s chief financial officer, said in a statement.
G.M. is paying a premium to tangible book value of about $ 550 million.
Ally was advised by Citigroup and Evercore Partners, while G.M. was advised by Bank of America Merrill Lynch and Barclays.