Tuesday, November 27, 2012

GM acquisition of the assets of the allies in Europe and Latin America

Tom Kirsher, AP
Tummelson-GM said Wednesday that it ally to buy financial operations in Europe, China and Latin America, as it is trying build a global finance unit to low-interest car loans and increase sales.

The auto giant U.S. credit business, GM financial, will pay $4.25 billion for the Allied assets, to help better the markets compete in GM, where other car manufacturers already have their own credit. Car manufacturers with the own finance arms often subsidize loans and leasing to increase sales.

The offer, which must be approved by regulatory authorities, is expected next year phased to close. Ally, ally over the carrying amount of the assets, a bonus of $550 million the $3.7 billion in the third quarter was maintained, said in a press release.

Ally, who was GM financial arm until it was taken by the U.S. Government in the 2008 collapse of the industry, banks is the sale of assets to money to repay of the Government for a $17.2 billion rescue package. So far, ally has paid back $5.8 billion, so that a balance of $11.4 billion. The company took advantage of GMAC financial services.

The move by the recovery of a unit that was once highly profitable before the collapse, GM will help Argus said research analyst Bill Selesky. They grow in countries where the middle class is growing, also helps GM, he said.

"they believe that future growth will be largely determined by the growth of emerging countries." You think, this is where the future of car loans, higher growth regions,"he said.

GM give $2 billion to GM financial to purchase, the car maker said in a statement. The deal includes the operations of the allies in Brazil, Mexico, Colombia, Chile, Germany, France, Italy, Belgium, the Netherlands, Sweden, Switzerland and Austria. Moreover, an ally of the 40-percent stake in a Chinese joint venture car financing companies.

The GM financial assets to approximately 33 billion $ double and liabilities, including debt rises to $27 billion by about 12 billion $ today, GM said in the statement.

"GM is entering the most aggressive rollouts of new vehicles in its history, and this acquisition will make us a more formidable competition that is all over the world, to provide competitive financing for our customers and dealers," said Chief Financial Officer Dan Ammann.

In exchange for the bail-outs for ally, the U.S. Government has 74 percent of the ordinary shares of the lender plus $ worth of 5.9 billion of preference shares.

Ally last month its Canadian operations at the Royal Bank of Canada for $4.1 billion and a Mexican insurance business for $865 million sold. The GM deal with 9 billion have allies $ in additional cash. It could use the money to buy back the preferred shares, but Gina Proia ally spokeswoman said that no decision has been taken to repay the Government.

Privately held allies has a first public offer, more money get back looking for the Government, but that has been put on ice until conditions improve the stock market.

The acquisition by GM a further step in the direction of is its global financial arm that a profit-center before the meltdown 2008 was mortgage. At GMAC, GM sold a 51-percent stake in 2006 when it was cash-starved. The new owners, under the leadership of private-equity firm Cerberus Capital Management LP, ran into trouble in 2008 with bad mortgage loans and had to be rescued by the Government.

Ally Financial Inc. now focuses on its U.S. car loans and bank holding company company. In may, his mortgage, loan and service subsidiary, residential Capital LLC, or ResCap, applied for creditor protection, cancellation of ally of ties to the troubled unit. Toxic mortgages from the ResCap caused the most allies of the financial problems. A tender offer of $3 billion from a unit Ocwen Financial Corp. ResCap has since taken over.

GM has nearly a 10 percent stake in ally.

In the third quarter of ally a $384 million net profit, reversing a loss from a year ago, before mostly because they have no losses from ResCap.

Verbundeter business continue to be strong, said global automotive services with the loan it increase and improvement in the third quarter despite the increasing competition amongst the lenders for car loans funded.

Meanwhile, retail deposits his allies banking division rose by 22 percent, and customer accounts grew by 24 percent, the company said.

October paid back ally $2.9 billion of debt that it under a government program the hundreds of billions of dollars in U.S. Bank issued, secured debt during the financial crisis. The program is independent of the rescue operation. Ally has in the past month that it intends, in December guaranteed to repay the remaining $4.5 billion through the Federal Deposit Insurance Corp. program.

AP business writer David Koenig in Dallas contributed to this report.

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