(GM - AmeriCredit poll story updated with analyst commentary) NEW YORK ( TheStreet) -- In an all-cash transaction valued at about $3.5 billion, GM has agreed to acquire subprime lender AmeriCredit ( ACF).
This would involve a payment of $24.50 in cash per share, or a 24% premium to AmeriCredit's $19.70 closing price the previous day. GM said it enters the deal in order to meet customer demand for leasing and non-prime financing for GM vehicles.
"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," GM Chief Executive Officer, Ed Whitacre said in a press release. "Adding AmeriCredit to our team will improve our competitiveness in auto financing offerings, and I am very pleased to have them on board." The automaker said that since GM and AmeriCredit launched a successful non-prime program in September 2009, GM's non-prime penetration has increased significantly. It adds that while AmeriCredit already has relationships with approximately 4,000 GM dealers, this transaction will enhance dealer receptivity and improve sales penetration rates through coordinated GM branding and targeted customer marketing initiatives. GM said the acquisition of AmeriCredit poses minimal impact to GM's balance sheet, and does not change GM's objective of achieving strong investment grade status. Under GM ownership, AmeriCredit will maintain its own direct access to the capital markets for its financing requirements. The transaction is expected to close by the end of the fourth quarter of 2010, pending certain closing conditions, including the approval of AmeriCredit shareholders. Shares of AmeriCredit stock were surging 21.1% to $23.85 on the news. In reaction to the deal, TheStreet reporter Jason Notte said in his GM Makes a Deal: Today's Outrage article Thursday that "GM's selective amnesia not only glossed over subprime lending's role in the world's current economic uncertainty, but put its potential domestic buyer base on the hook for another ill-conceived financing scheme."
Neil Barofsky, TARP's special inspector general, estimates the government will need to sell its common stock holdings in GM for a little less than $134 per share in order to recoup its investment in the iconic car company.