General Motors Financial Company, the financial subsidiary of automotive giant General Motors (NYSE:GM), said in a statement Wednesday that it will purchase the automotive financing operations in Latin America, China, and Europe from Ally Financial.
Ally has looked for ways recently to speed up bailout repayment funds to the U.S. government, which controls a majority stake in the company. It laid out plans to sell its international arm back in May after deciding to refocus on North American business in the United States and Canada. GM, meanwhile, claims this purchase will boost sales in Latin America and Europe -- the latter being an especially tricky geographical point for GM and American auto rival Ford (NYSE:F) in the recent past.
While Ford has already launched a significant restructuring plan to fix its declining European business, GM has continued to struggle in the tough European economy.
In Wednesday's statement, GM Financial's president and CEO emphasized the relationship between his company and Ally's business, highlighting the Ally team's strengths in risk management, underwriting, and customer service. He added: "The addition of these businesses significantly strengthens GM Financial's core role, which is to support the sale of GM vehicles. The international operations leadership team will also transition to GM Financial, which will provide tremendous continuity for stakeholders and customers."
The $4.25 billion acquisition, which is expected to be completed sometime in 2013, is expected to add several hundred million dollars to GM Financial's annual before-tax earnings.
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