What's $3.5 billion from one company to another? For General Motors, it's the cash needed to acquire AmeriCredit Corp. The deal is designed to give auto dealers an additional option for financing cars for buyers of new vehicles. Since 2006, GM buyers have faced less appealing financing options than GM had offered in the past. With the AmeriCredit deal, they expect to be able to offer better financing terms, particularly for sub-prime borrowers. In addition, they plan to greatly expand their vehicle leasing options.
The purchase has been a long time in the making. According to GM, the two companies have been working together for some time and over 4,000 dealerships already have relationships with AmeriCredit.
GM chairman and CEO, Ed Whitacre praised the purchase:
This acquisition supports our efforts to design, build and sell the world's best vehicles by expanding the financing options we can offer to consumers who want to buy GM vehicles ... Adding AmeriCredit to our team will improve our competitiveness in auto financing offerings, and I am very pleased to have them on board.
The $3.5 billion purchase has already been approved by the boards of both companies. The transaction is expected to be completed by the end of the year. It still must be approved by AmeriCredit's shareholders.
Since GM emerged from bankruptcy in 2009, they have been trying to improve their operations. One of the main areas of focus was financing, and with this deal, GM believes it is now well on it's way. While the purchase price of $3.5 billion sounds mind numbing, keep in mind that GM has assets of $10 billion, so the purchase of AmeriCredit is, in their world, affordable.
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