Ally Financial has struck a $2.65 billion deal to buy CardWorks, enabling it to enter the credit card and merchant acquiring sectors.
Ally will pay $1.35 billion in cash and $1.3 billion in stock for CardWorks, a non-prime credit card and consumer finance lender with $4.7 billion in assets and $2.9 billion in deposits.
Ally began life as an auto financing outfit before diversifying to offer online banking, mortgage lending and investment-advisory services.
The CardWorks acquisition helps to expand Ally's business further, adding a credit card platform, full-spectrum servicing and recovery operation and a nationwide merchant acquiring business.
Upon completion of the transaction, Ally will serve over 11 million customers in all 50 states.
Jeffrey Brown, CEO, Ally, says: "CardWorks represents an industry-leading credit card platform in the US, and this acquisition serves as an important milestone in Ally's evolution to be a full-service financial provider for our customers."
The deal, approved by both boards, is slated to closed in the third quarter, subject to regulatory approval.