GM is about to purchase part of Ally Financial non-US operations for $4 billion.
Ally, was once wholly owned by GM and was known as GMAC. Now the company is forced to sell its international operations to pay back the $17.2 billion bailout offered by the US government. Currently the US Treasury owns 74% stake, part of the bailout, from which Ally has repaid $5.9 billion.
This week a deal will be announced regarding Ally’s international businesses, which include automotive finance operations in Europe and Latin America. Analysts believe that if GM will manage to buy the automotive finance operations will help the company improve its situation in Europe and achieve its plan to reach profitability by mid-decade.
“We continue to be focused on maximizing shareholder value and finding the best solutions for the remaining international operations,” said Ally spokeswoman Gina Proia.
Last week Ally announced it has made a deal with Royal Bank of Canada to sell its Canadian operations for $4.1 billion. GM Chief Financial Officer Dan Ammann said that this business will help the automaker sell more cars globally, but that the aim is not to create another GMAC-style company.
“We don’t want to go back and recreate a $300 billion monster — of which GMAC was at its peak,” Ammann said.