General Motors entered into a definitive agreement on July 22 to acquire AmeriCredit, an independent auto finance company, in an all-cash transaction valued at approximately $3.5 billion. GM said it acquired the firm to meet customer demand for leasing and non-prime financing for GM vehicles.
This acquisition puts GM back in the financing business and allows those borrowers with poor or faulty credit ratings to seek out loans. Some analysts say this will help GM compete better with Ford and Toyota.
“Direct ownership of AmeriCredit’s expertise will provide consistent availability of non-prime financing for GM customers throughout all economic cycles,” GM announced in a press release. “While AmeriCredit already has relationships with approximately 4,000 GM dealers, this transaction will enhance dealer receptivity and improve sales penetration rates through coordinated GM branding and targeted customer marketing initiatives.”
“With total assets of approximately $10 billion, the acquisition of AmeriCredit poses minimal impact to GM’s balance sheet, and does not change GM’s objective of achieving strong investment grade status.  Under GM ownership, AmeriCredit will maintain its own direct access to the capital markets for its financing requirements.”
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.