Consumer financial services company Synchrony has agreed to acquire Ally Financial’s point-of-sale financing business, including $2.2bn of loan receivables.
The point-of-sale financing business portfolio also includes relationships with about 2,500 merchant locations and supports over 450,000 active borrowers in home improvement services and healthcare.
Through the proposed transaction, Synchrony aims to create a differentiated solution in the industry to offer both revolving credit and instalment loans at the point of sale in the home improvement vertical.
It is expected to extend Synchrony’s multi-product strategy by broadening its revolving credit as well as promotional financing products to Ally Lending’s merchants.
Besides, the acquisition will expand Synchrony’s reach in high-growth speciality areas including roofing, HVAC and windows.
The Ally Lending health portfolio will also complement Synchrony’s existing health and wellness platform and extend Synchrony’s reach in cosmetics, audiology and dentistry.
Synchrony President and CEO Brian Doubles said: “This deal represents a significant and exciting growth opportunity for Synchrony – it’s a strong strategic fit that will unlock value and operational efficiency by integrating products and teams in our expanding platforms of home improvement and health and wellness.
“This accretive acquisition enhances Synchrony’s position by offering our multi-product portfolio to nearly 2,500 Ally Lending merchant locations and enables us to achieve attractive economies of scale while further diversifying our merchant base.
Based in the US, Ally Financial serves over 11 million customers through a full range of online banking services including deposits, mortgage, point-of-sale personal lending, and credit card products along with securities brokerage and investment advisory services.
The firm also has a strong corporate finance business that delivers capital for equity sponsors and middle-market companies, auto financing and insurance offerings.
Both parties intend to collaborate to ensure a smooth transition for merchants, customers and employees.
Ally Financial CEO Jeff Brown said: “Today’s agreement to sell Ally Lending is part of a broader initiative to invest resources in growing scale businesses and strengthening relationships with dealer customers and consumers.
“This transaction allows us to continue to be disciplined in allocating capital to optimise risk-adjusted returns as we manage through a dynamic operating environment.”
Subject to customary conditions, the deal is anticipated to be completed in Q1 2024.
