GM unit bids for Ally international businesses
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DETROIT -- General Motors has made a bid for Ally Financial Inc.'s international operations, about two months after CEO Dan Akerson said he'd like to buy the business.
GM's lending unit, GM Financial, bid on Ally's international operations last month, GM said in a filing with U.S. securities regulators. GM Financial and "a number of third parties" are in "the preliminary stages of the bid process investigation," the automaker said.
Analysts said the Ally assets could attract bids in the range of $2 billion to $4 billion.
"It's a good thing to have control of financial services companies," said Guggenheim Securities analyst Matthew Stover. "They tend to be very profitable. From an investment standpoint, they tend to be pretty good businesses and from a competitive standpoint they help you be more flexible in the (sales) market."
In May, Akerson said during an interview with Bloomberg that he was interested in acquiring the Ally unit, which includes operations in Canada, Mexico, Europe and Latin America.
"We're the natural buyer," Akerson told the news service, adding that GM is "not going to bleed to buy it." The acquisition could boost GM's sales in those regions by improving access to financing for its customers.
In its filing today, GM said the acquisition "could expand its operations materially in international markets." It said there is "no assurance" that it will emerge as the buyer.
A GM Financial spokeswoman declined to comment.
"We have received interest from approximately 30 different parties" in the international operations, an Ally spokeswoman said in an e-mail. "We are encouraged by the initial progress."
Ally, the former GMAC that was once owned by GM, has said that it wants to divest more than $30 billion in overseas auto finance and insurance assets as part of its plan to repay the U.S. government. The Treasury Department still owns about 74 percent of Ally from its 2009 bailout of the lender.
In a May research note, UBS analyst Colin Langan said he believes GM is interested in acquiring several pieces of Ally, including its leasing, floorplan financing and international businesses.
According to Monday's filing, GM Financial's consolidated assets could more than double and it could incur "substantial amounts of indebtedness" if it buys Ally's assets.
Such an expansion could have "significant impacts on its business, results of operations, liquidity and financial condition," the filing said.
"Clearly, GM may now be willing to let GM Financial get bigger after its initial strategy with the AmeriCredit acquisition to target select non-prime and lease financing markets in the United States," said Citi analyst Itay Michaeli.
Michaeli added that opportunities to buy such assets do not come around too often and financial services businesses allow automakers to improve dealer relations, be more flexible with the incentives they offer consumers and better retain customers.
Reuters contributed to this report.
GM 8-K DISCLOSURE
Pursuant to disclosures being made by General Motors Financial Company Inc., our wholly owned captive finance company ("GM Financial") we are simultaneously making this disclosure to fulfill Regulation FD requirements.
Ally Financial Inc. ("Ally Financial") has announced plans to divest its international operations in Canada, Mexico, Europe and Latin America. GM Financial and a number of other third parties submitted indicative bids in July and are at the preliminary stages of the bid process investigation. There is no assurance that GM Financial will be successful in acquiring any of Ally Financial's international operations. However, if GM Financial is successful in completing a transaction, it could expand its operations materially in international markets. Such expansion could have significant impacts on its business, results of operations, liquidity and financial condition. If GM Financial is the successful bidder, its consolidated assets could potentially more than double, and it could incur substantial amounts of indebtedness, including secured debt. Depending on the scale of the operations GM Financial may acquire and the amount of equity that it invests in such a transaction or transactions, its consolidated debt and other liabilities could potentially more than double and its ratio of adjusted assets (giving effect to the transaction or transactions) to adjusted equity (excluding goodwill) could potentially more than double as well.
You can reach Mike Colias at mcolias@crain.com.
