GM to buy AmeriCredit Corp. for $3.5 billion

[clearvision]

Los Angeles Times:

General Motors Co. is getting back into the credit business, a move that will give its dealers more options to lease and finance car sales.

GM said Thursday that it would purchase AmeriCredit Corp. in an all-cash transaction valued at approximately $3.5 billion, or about $24.50 a share.

The acquisition gives GM what's known as a "captive finance unit" or lending division that allows it more flexibility to offer lease and finance deals. It would fill the role once played by GMAC; the automaker sold all but a minority interest of that company in 2006.

"Adding AmeriCredit to our team will improve our competitiveness in auto financing offerings, and I am very pleased to have them on board," said Ed Whitacre, GM's chief executive.

The automaker said it will continue to work with Ally Financial, the former GMAC finance company, for loans to customers with good credit and to provide inventory financing for dealers.

It would be both politically and financially untenable to sever the relationship with Ally to channel all of its financing business to AmeriCredit, said Kirk Ludtke, an analyst at CRT Capital Group in Stamford, Conn.

The federal government has approximately $57 billion of commitments -- including $17.9 billion of direct investment, $32 billion of federally insured consumer deposits and $7 billion of unsecured debt guarantees -- to Ally, he said.

"We continue to believe that the Obama administration is unlikely to allow either GM or Ally to pursue a strategy that would undermine the other," Ludtke said.

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OK, This is just wrong on so many levels. We bail out a company, it goes bankrupt, we bail it out again. Now months later it buys a "creative finance" company for 3.5B!!! Did I miss us getting paid back? Oh and we still are on the hook for its former GMAC financing unit (now Ally) because of their sorry loan portfolio. The Obama administration won't "allow" these companies to compete... I'm biting my tongue.

[Geee]

This is so hard to believe!!! What the H!

[Casino67]

This is so hard to believe!!! What the H!

 

And auto financing was exempted from the Financial Regulation bill just passed. Urkel really knows what he is doing? Come on November!!!!

[clearvision]

Bump because I just got home and this still pisses me off.

[SrWoodchuck]

GM is now able to offer low interest loans to low income individuals & increase their unit productivity against Ford & Toyota, while using whatever profit is made to pay the incomes & "Caddy" health plans of seriously overpaid union workers, who contribute heavily to progressive regimes, that set up the whole con.

 

A perfect circle of socialist self-interest.

[Argyle58]

As much as I dislike Ford products, I guess that's what I'll be driving from now on. I only buy American, but I refuse to support GM or Chrysler.

[Geee]

Grassley questions GM’s purchase of auto loan firm

 

By Vicki Needham

Sen. Chuck Grassley (R-Iowa) has asked a government watchdog to look into General Motor’s $3.5 billion purchase of an auto loan company instead of paying back federal bailout debt.

 

Grassley sent a letter to Neil Barofsky, special inspector general for the Troubled Asset Relief Program, asking for an investigation of GM’s and the Treasury’s role in the purchase.

 

“If GM has $3.5 billion in cash to buy a financial institution, it seems like it should have paid back taxpayers first,” Grassley wrote. “After GM’s experience with GMAC, which left GM seeking a taxpayer bailout, you have to think the company and, in turn, the taxpayers would be better off if GM focused on making cars that people want to buy and stayed clear of repeating its effort to make high-risk car loans.”

 

GM announced Thursday the purchase of Fort Worth, Texas-based AmeriCredit Corp., a profitable company that specializes in auto loans to borrowers with below-average credit.

 

http://thehill.com/blogs/on-the-money