Nov 21 Ally Financial said it will sell its
Europe and Latin America operations to GM Financial, a unit of
General Motors, for about $4.2 billion.
The combined operations in Europe and Latin America
represented about $16.1 billion in assets at the end of the
third quarter, Ally said in a statement.
The transaction involves two companies that are still
partially owned by the U.S. government after a series of
bailouts. The companies also have an intertwined history: Ally
is the former financing arm of GM and was once known as GMAC.
The deal is expected to add $300 million to $400 million to
GM Financial's annual earnings before taxes.
GM expects to contribute about $2 billion in cash to GM
Financial to fund the purchase, the automaker said in a separate
GM has been gradually rebuilding its finance operations
since selling a controlling stake in GMAC to private equity firm
Cerberus Capital Management in 2006.
The U.S. automaker bought AmeriCredit Corp in 2010 and in
August disclosed it was among the bidders for Ally's
international operations. GM and Cerberus remain Ally
Ally is focusing on U.S auto lending and banking in a bid
to turn its business around. In May, its Residential Capital
(ResCap) mortgage unit filed for bankruptcy, and on Wednesday a
bankruptcy court judge approved the sale of its mortgage
operations to Ocwen Financial Corp and Walter Investment
Management Corp for $3 billion.
ResCap is also selling a loan portfolio to Warren Buffett's
Berkshire Hathaway Inc for $1.5 billion. [ID:
Of the $17 billion it owes the U.S. government, Ally has
paid back $5.8 billion, including dividend payments.
Ally, which is 74 percent owned by the U.S. government,
announced in May a plan to sell its international operations in
a bid to speed up repayment of taxpayer money.
Ally agreed to sell its Canadian auto finance and deposit
business to Royal Bank of Canada for $4.1 billion
and its Mexican insurance unit to ACE Ltd for $865
million last month.
Reuters reported earlier this month that Ally was nearing a
deal to sell its Europe and Latin America operations, with GM
emerging as the leading bidder.