At last check Ally Financial shares were off 10% at $28.67.
Piper Sandler analyst Kevin Barker said in a note to clients that "that's a steep price to pay in order to diversify the company's product offering."
Barker added that he would have preferred Ally "organically build a card offering or [deploy] capital elsewhere."
While the purchase price may be reasonable, KBW's Sanjay Sakhrani said, he needed "more color on go-forward capital ratios, given the addition of this asset category."
Both companies' boards have approved the terms. Subject to conditions including regulatory clearances, the transaction is expected to close in the third quarter, the companies said.
"CardWorks represents an industry-leading credit card platform in the U.S., and this acquisition serves as an important milestone in Ally's evolution to be a full-service financial provider for our customers," Ally Chief Executive Jeffrey J. Brown said in statement.
"Ally is complementary to all of our existing consumer finance business lines, including our credit card and recreational lending businesses, as well as our merchant acquiring, third-party loan servicing, and recovery businesses," CardWorks Founder, Chairman and and CEO Don Berman said.
Under the terms of the definitive agreement, the Merrick Bank subsidiary of CardWorks will merge into Ally Bank. Ally said the transaction can add as much as a percentage point to adjusted profit by 2022.
Closely held CardWorks, Woodbury, N.Y., has $4.7 billion of assets and $2.9 billion in deposits via locations in Florida, Utah and Pennsylvania. The company specializes in unsecured servicing and merchant services, and also offers recreational and marine consumer finance loans.
Berman owns 70% of CardWorks and will receive a combination of cash and Ally common stock. After the closing, he'll continue to oversee CardWorks and will join Ally's board.