Straight from GM News this morning

DETROIT – To meet customer demand for leasing and non-prime financing for GM vehicles, General Motors and AmeriCredit Corp. (NYSE: ACF) today announced they have entered into a definitive agreement for GM to
acquire AmeriCredit, one of the nation's leading independent auto
finance companies, in an all-cash transaction valued at approximately
$3.5 billion.


“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," said GM Chairman and Chief
Executive Officer, Ed Whitacre. “Adding AmeriCredit to our team will
improve our competitiveness in auto financing offerings, and I am very
pleased to have them on board."


The acquisition establishes the core of a new GM captive financing arm that will enable GM to provide customers with a more complete range of financing options, while creating significant growth opportunities
for both GM and AmeriCredit. Since GM and AmeriCredit launched a
successful non-prime program in September 2009, GM’s non-prime
penetration has increased significantly.  Upon completion of the
transaction, AmeriCredit intends to also re-enter the leasing business
which will provide expanded leasing availability for all GM customers.


Direct ownership of AmeriCredit’s expertise will provide consistent availability of non-prime financing for GM customers throughout all economic cycles.  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.

“With AmeriCredit providing us niche capabilities in leasing and non-prime financing, along with the continued strong support of Ally Financial and others for prime retail and dealer financing, we’ve set up
a very competitive solution for our financing needs, which will be
resilient through credit and business cycles,” said GM Vice Chairman and
Chief Financial Officer, Chris Liddell. 


AmeriCredit President and Chief Executive Officer Daniel Berce said, “We’re excited about joining the GM team. While we will be expanding our product set to more fully support GM, we’ll continue to offer our loan
products to the more than 11,000 dealers across the country we serve
today.  Long term, this transaction will deliver benefits to our
dealers, customers and employees.”


The highly regarded AmeriCredit management team will remain intact, which will assist in minimizing integration risk and maximizing opportunities between the two companies. 


With total assets of approximately $10 billion, 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.


Under the terms of the agreement, which has been approved by both companies' boards of directors, at closing, AmeriCredit shareholders will receive $24.50 in cash for each share of stock held as of the
transaction closing date.


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.


GM and AmeriCredit will hold a joint conference call today for analysts and media at 10:00 a.m. Eastern Daylight Time.  The toll-free number for U.S. callers is 800-764-4852. The dial-in number for
international callers is 1-212-231-2917.  When prompted, please ask to
be connected to the General Motors conference call.  Details on the call
and information about how to access a replay of the call can be found
on the GM or AmeriCredit websites at www.gm.com/corporate/investor_information/cal_events or www.americredit.com/investors/presentations.asp, respectively.


About General Motors: 

General Motors, one of the world’s largest automakers, traces its roots back to 1908.  With its global headquarters in Detroit, GM employs 205,000 people in every major region of the world and does business in
some 157 countries.  GM and its strategic partners produce cars and
trucks in 31 countries, and sell and service these vehicles through the
following brands:  Buick, Cadillac, Chevrolet, GMC, Daewoo, Holden,
Jiefang, Opel, Vauxhall and Wuling. GM’s largest national market is the
United States, followed by China, Brazil, Germany, the United Kingdom,
Canada, and Italy.  GM’s OnStar subsidiary is the industry leader in
vehicle safety, security and information services. General Motors
acquired operations from General Motors Corporation on July 10, 2009,
and references to prior periods in this and other press materials refer
to operations of the old General Motors Corporation.  More information
on the new General Motors can be found at www.gm.com.


About AmeriCredit:

AmeriCredit Corp. is a leading independent automobile finance company that provides financing solutions indirectly through auto dealers across the United States. AmeriCredit has approximately 3,000 employees
in the U.S. and Canada, 800,000 customers and $9 billion in auto
receivables. The Company was founded in 1992 and is headquartered in
Fort Worth, Texas.  For more information, visit www.americredit.com.


Forward-Looking Statements:

GM and AmeriCredit Corp. advise that in this press release and in related comments by our management, our use of the words “expect,” “anticipate,” “possible,” “potential,” “target,” “believe,” “commit,”
“intend,” “continue,” “may,” “would,” “could,” “should,” “project,”
“projected,” “positioned” or similar expressions is intended to identify
forward-looking statements that represent our current judgment about
possible future events. We believe these judgments are reasonable, but
these statements are not guarantees of any events or financial results,
and our actual results may differ materially due to a variety of
important factors.  Among other items, such factors might include for
GM: our ability to realize production efficiencies and to achieve
reductions in costs as a result of our restructuring initiatives and
labor modifications; our ability to maintain quality control over our
vehicles and avoid material vehicle recalls; our ability to maintain
adequate liquidity and financing sources and an appropriate level of
debt, including as required to fund our planning significant investment
in new technology; our ability to realize successful vehicle
applications of new technology and our ability to comply with the
continuing requirements related to U.S. and other government support. 
For AmeriCredit these factors include our ability to successfully
operate in variable economic conditions, including fluctuating interest
rate environment, changes in competitive, regulatory and legal
environment, volatile wholesale vehicle values; our ability to service
adverse changes in portfolio performance, our reliance on warehouse
financing and capital markets; our ability to continue to securitize
loans; our ability to obtain credit enhancement for securitization
transactions on acceptable terms; our ability to manage the high degree
of risk associated with subprime borrowers, and our exposure to
litigation.


Our most recent annual reports on Form 10-K and quarterly reports on Form 10-Q provide information about these and other factors, which we may revise or supplement in future reports to the SEC.

Important additional information regarding the merger will be filed with the SEC:

In connection with the proposed merger, AmeriCredit plans to file a proxy statement with the Securities and Exchange Commission (the “SEC”). INVESTORS AND SECURITY HOLDERS ARE ADVISED TO READ THE PROXY STATEMENT
WHEN IT BECOMES AVAILABLE BECAUSE IT WILL CONTAIN IMPORTANT INFORMATION
ABOUT THE MERGER AND THE PARTIES TO THE MERGER. Investors and security
holders may obtain a free copy of the proxy statement (when available)
and other relevant documents filed with the SEC from the SEC’s web site
at http://www.sec.gov. Investors and
security holders and other interested parties will also be able to
obtain, free of charge, a copy of the proxy statement and other relevant
documents (when available) by directing a request by mail or telephone
to Investor Relations, AmeriCredit Corp., 801 Cherry Street, Suite 3500,
Fort Worth, Texas 76102, telephone (800) 644-2297, or from
AmeriCredit’s web site at www.AmeriCredit.com.


AmeriCredit and its directors, executive officers and other members of its management and employees may be deemed to be participants in the solicitation of proxies from AmeriCredit's shareholders with respect to
the merger. Information about AmeriCredit’s directors and executive
officers and their ownership of AmeriCredit’s common stock is set forth
in AmeriCredit’s Proxy Statement on Schedule 14A filed on September 16,
2009.  Shareholders and investors may obtain additional information
regarding the interests of AmeriCredit and its directors and executive
officers in the merger, which may be different than those of
AmeriCredit’s shareholders generally, by reading the proxy statement and
other relevant documents regarding the merger, which will be filed with
the SEC.


GM and its directors, executive officers and other members of its management and employees may be deemed to be participants in the solicitation of proxies from AmeriCredit’s shareholders with respect to
the merger. Information about GM’s directors and executive officers is
set forth in GM’s Form 10-K filed on April 7, 2010 and GM’s Form 10
Amendment No.1 filed May 17, 2010. These documents are available free of
charge from the SEC’s web site at http://www.sec.gov,
and by directing a request by mail or telephone to Investor Relations,
General Motors Company, 303 Renaissance Center, Detroit, Michigan
48265-3000, telephone (313) 667-1669, or from GM’s web site at www.GM.com.

 


Tags: americredit, gm

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It will be interesting to see how this changes the non-prime landscape. Americredit has worked with independents for some time, will GM? Will GM serve non-GM dealers?

Thoughts from anyone?
With this quote, it appears they may indeed. The big questions in my mind is will they extend their leasing program to non-GM dealers and independents???

AmeriCredit President and Chief Executive Officer Daniel Berce said, “We’re excited about joining the GM team. While we will be expanding our product set to more fully support GM, we’ll continue to offer our loan
products to the more than 11,000 dealers across the country we serve
today. Long term, this transaction will deliver benefits to our
dealers, customers and employees.”
With GM as the owner it is inconceivable to think they would use their resources to invest in independents. They might floor plan some non GM inventory in dualed facilities. At some point, if they have money running out of their ears, they might do more outside the GM family. If that happens, sell EVERYTHING because what ever balloon is driving the economy at that point will be about to burst.
Just got off joint GM, Americredit conference call.

It appears that this deal came together very quickly with GM stating that discussions of acquisition with Americredit started just about a month ago.

GM hinted at their need for strong leasing programs for new vehicles and they see the development of that program through Americredit.

GM sees their biggest opportunity for growth in the non-prime and leasing market, stating that their current penetration in non-prime is currently only at 4%, and their leasing penetration is at 7%.

GM claims to be only focusing on the non-prime and leasing for Americredit and not expanding to prime with this arm, they have relationships with Ally and others to fulfill the prime side.

Americredit states they will be continuing their work with their large dealer base including non-GM dealers.

Americredit leadership team to remain in place

Acquisition should be completed during the 4th quarter of this year.

Sounds like this could be the best news GM dealers have heard in a while.
I was also on the call. I found it sketchy with very few details. I wonder if taxpayers knew they were contributing to a GM acquisition fund? This might have been more appropriate AFTER a succeesful IPO bought out taxpayers.

I didn't hear floor plan mentioned. I suspect huge subventions will be back again. This could seriously weaken pre-owned values and do it quickly.

Does anyone have any information on how CDOs impact the auto finance securitization market? There is a theory floating around that the new finance reform bill will stop the ABS market in its tracks. Personally, I doubt this, as it came from Tea Party alarmists, but I'm wondering if anyone has any more on this.
Thanks for the update Harlene
To all,

I believe this a good move for General Motors in that they desperately need a finance arm that they own that can support the retail sales and financing needs of their dealer body. GM has been adrift since divesting themselves of 51% of GMAC years ago, and this should solve that problem.

They also needed something that allows them to reach into the subprime credit market and this certainly accomplishes that. They have apparently had great success in the time the two companies have been working together since September 2009.

Regarding the Special Finance market, the jury is out. AmeriCredit has an extremely capable management team, in my opinion. IF they remain, and IF they are allowed to operate independently, then I feel it should at least be a push, and not negative. My concern is for the independent dealers that have had solid and long term relationships. Should GM require AmeriCredit to become a franchise-dealer only company, that obviously doesn't bode well for the independents.

Additionally, in my opinion GM has a horrible track record with subprime companies. Through GMAC they owned both National Auto Finance Company and Nuvell and both got flushed well before the bankruptcy.

While I have high regard for GM products, I have been unimpressed by the "new" GM which still acts very much like the old GM - just with a different spin. If this translates to AmeriCredit, the SF industry will have lost a key player. Only time will tell.

AmeriCredit officials are attending all three of my regional SF conferences during the first three weeks of August. I will be anxious to talk with them and hear their comments.
Ok -- here is my Dealer view -- if Americredit buys competitive leases in the same way the old GMAC bought leases, it will be the PERFECT STORM!!  Whether you like the NEW GM or not, it won't matter.  With GM's new product, they will DOMINATE!!!!  Let's revisit this conversation at the end of 1st quarter of 2011.  I "smell" domination -- Goebel, it's time to get on the GM Bus.
Across the board, I believe that G.M. is currently building the best cars in the world, car for car. Regarding G.M.'s buy out of Americredit, please hold in mind that every G.M. dealer is not, as of this moment, particularly adroit at secondary financing.

Because of this fact, this could prove to be a two pronged fork for independent automobile dealers; those two prongs being: 1. The fact that many more G.M. dealers may hold on to more cars for the secondary financing market, thus leaving fewer vehicles for the independent auto dealer to purchase and, 2. it has the potential to bring most, if not all, of the less adroit secondary finance G.M. dealers into the secondary financing market; the possible result could be fewer cars for the independents and more competition to fill the secondary buyer's needs.
GMAC just announces they are purchasing leases down to a 620 score.  Previously, it was 660.  It's amazing what a little competition will do to get a bank "moving" & this time the dealers are the beneficiaries!  Now if we can just get some inventory:) .

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