Ally Financial (ALLY) - Get Free Report said Wednesday it is terminating its planned $2.65 billion acquisition of privately held CardWorks due to fluctuating market and economic conditions as a result of the COVID-19 pandemic.
The deal had originally been announced in February, just weeks before the U.S. was hard hit by the coronavirus, roiling financial markets.
"After careful consideration, Jeff Brown and I, along with our boards of directors, concluded that it would be in the best interest of our customers and our stakeholders, to terminate the agreement," said CardWorks Chief Executive Officer Don Berman, in a statement.
Neither company will have to pay the other a termination fee or break-up fee under the mutual decision to terminate the agreement, Ally said in a statement.
At the time of the deal’s announcement Ally said the acquisition would “further diversify Ally's product offerings, adding an established credit card platform, full-spectrum servicing and recovery operation and a nationwide merchant acquiring business.”
CardWorks is a credit card issuer focused on the “non-prime” segment.
The acquisition had called for Ally to pay $1.35 billion in cash and $1.30 billion in common stock, or 39.5 million shares for CardWorks.
Shares of Ally rose $1.90, or 10.4%, to $20.21 in after-hours trading Wednesday. The stock had been trading above $32 a share immediately prior to the February announcement of the acquisition plan.
Goldman Sachs and Co. LLC had served as financial adviser and Sullivan and Cromwell served as legal counsel to Ally in the deal. Wachtell, Lipton, Rosen & Katz served as legal counsel to CardWorks.