General Motors says it has agreed to acquire AmeriCredit Corp. in an all-cash transaction valued at approximately $3.5 billion. The move will allow GM a chance to again offer financing and leases for subprime buyers.
AmeriCredit, one of the U.S.’s leading independent auto finance companies, will establish the core of a “new GM captive financing arm” that will enable the automaker to provide customers with a broader spectrum of financing options, GM said in a release today.
Critics of the move, however, worry that the automaker will return to making risky loans in a still shaky U.S. economy.
GM said it advised the U.S. Treasury Department of the acquisition.
“This acquisition supports our efforts to design, build and sell the world’s best vehicles by expanding the financing options we can offer to consumers who want to buy GM vehicles” said GM chairman and CEO, Ed Whitacre.
Since GM and AmeriCredit launched a successful non-prime program in September 2009, GM’s non-prime penetration has increased significantly.
Upon completion of the transaction, AmeriCredit says it intends to also re-enter the leasing business, which will provide expanded leasing availability for all GM customers.
AmeriCredit, which already has relationships with approximately 4,000 GM dealers, says this will improve sales penetration rates through coordinated GM branding and targeted customer marketing initiatives.
“With AmeriCredit providing us niche capabilities in leasing and non-prime financing, along with the continued strong support of Ally Financial and others for prime retail and dealer financing, we’ve set up a very competitive solution for our financing needs, which will be resilient through credit and business cycles,” said GM Vice Chairman and Chief Financial Officer, Chris Liddell.
AmeriCredit’s management team will remain intact for the time being and the company will maintain its own direct access to the capital markets for its financing requirements.
Under the terms of the agreement, which has been approved by both companies' boards of directors, at closing, AmeriCredit shareholders will receive $24.50 in cash for each share of stock held as of the transaction closing date.
The transaction is expected to close by the end of the fourth quarter of 2010, pending certain closing conditions, including the approval of AmeriCredit shareholders.