Shares of OneMain Holdings, Inc. (NYSE:OMF) are down by about 12% as of 3:30 p.m. EST as new disclosure suggests that it backed away from an earlier decision to put itself up for sale. Language in its financial filings suggests that a sale of the business was considered, but is now off the table.
OneMain Holdings stock jumped on Oct. 9 when the Wall Street Journal broke the news that the company was in talks to sell itself, reporting that it was in "advanced discussions with a number of interested parties."
More recently, on the company's third-quarter conference call, management side-stepped a question about entertaining offers for the business. When asked to comment on whether the company was for sale, OneMain's president and chief executive officer, Jay Levine, said that OneMain doesn't "comment on market rumors," according to a conference call transcript.
Page 50 of the company's quarterly report filed with the Securities and Exchange Commission this morning says that the company "recently completed an evaluation of certain alternatives to maximize stockholder value, including a sale of its business. The evaluation has concluded and the Company continues to implement its previously disclosed strategies."
The read-through is that OneMain Holdings considered putting itself up for sale, but is no longer entertaining the option for reasons that were not disclosed.
The market is left to wonder why, exactly, talks to sell OneMain would have fallen through. It could have been as simple as the buyer's inability to locate attractive financing, or as troublesome as concerns over OneMain Holding's underlying loan performance.
What's clear is that OneMain did evaluate the option of selling out. It wasn't just a rumor, as management commentary on the conference call suggested, but a real consideration.
How far along the process went is unknown, but investors aren't eager to let shares trade at a premium based on a now-scuttled sales process. After the plunge today, OneMain shares are trading at a price about 4% lower than the last close before the Wall Street Journal reported the consumer lender was up for sale, erasing the gain it briefly enjoyed as investors sent the stock higher in anticipation of a deal premium.