Ally and CardWorks Reach Agreement on Sale of Ally's Credit Card Business
Rhea-AI Summary
Ally Financial (NYSE: ALLY) has announced a definitive agreement to sell its credit card business to CardWorks and its subsidiary Merrick Bank. The deal includes a $2.3 billion credit card portfolio with 1.3 million active cardholders as of December 31, 2024.
The strategic move is part of Ally's broader strategy to streamline operations and focus on core businesses to improve returns. CardWorks, which has been serving as the servicing partner for the platform since its inception, views this acquisition as an expansion of its near-prime credit card business.
The transaction is expected to close in 2025, subject to customary closing conditions. Both companies will work together to ensure a smooth transition for customers and employees. J.P. Morgan Securities acted as financial advisor to Ally for the transaction.
Positive
- Sale of $2.3 billion credit card portfolio allows focus on core businesses
- Strategic streamlining expected to drive improved returns
- Smooth transition planned with existing servicing partner
Negative
- Divestment of 1.3 million active cardholders reduces revenue diversification
- Exit from credit card business limits growth potential in consumer lending
News Market Reaction – ALLY
On the day this news was published, ALLY gained 3.85%, reflecting a moderate positive market reaction.
Data tracked by StockTitan Argus on the day of publication.
Sale enables Ally to be more focused on its core businesses; acquisition enhances CardWorks' position as a leading credit card issuer and servicer
"Ally's decision to sell its credit card business is part of our broader strategy to pursue a more focused approach, enabling us to simplify and streamline our structure, prioritize our core businesses, and drive improved returns," said Ally CEO Michael Rhodes. "We are proud of the results the business generated over the last three years and pleased with the terms of the agreement and the opportunity for this business to continue growing with CardWorks. As we embark on the next chapter at Ally, we remain relentlessly focused on doing right by our customers, communities, employees and shareholders."
"This portfolio and platform acquisition is an exciting step in the expansion of our near-prime credit card business, and a natural fit for us," said CardWorks CEO Dan Pillemer. "As servicing partner to the platform since inception, we have always admired this talented team and are thrilled to add them to the CardWorks and Merrick Bank family."
Ally and CardWorks will work together to ensure a smooth transition for customers and employees. The transaction is expected to close in 2025, subject to the completion of customary closing conditions.
J.P. Morgan Securities LLC served as the financial advisor and Sullivan & Cromwell LLP served as legal advisor to Ally. Cravath, Swaine & Moore LLP served as legal advisor to CardWorks.
About Ally Financial
Ally Financial Inc. (NYSE: ALLY) is a financial services company with the nation's largest all-digital bank and an industry-leading auto financing business, driven by a mission to "Do It Right" and be a relentless ally for customers and communities. The company serves approximately 10 million customers with deposits and securities brokerage and investment advisory services as well as auto financing and insurance offerings. The company also includes a robust corporate finance business that offers capital for equity sponsors and middle-market companies. For more information, please visit www.ally.com.
For more information and disclosures about Ally, visit https://www.ally.com/#disclosures.
For further images and news on Ally, please visit http://media.ally.com.
About CardWorks and Merrick Bank
CardWorks is a trusted leader in credit and payments, known for its people-first approach, innovative use of data and technology, and unwavering commitment to compliance. For over 38 years, CardWorks has empowered millions of customers and partnered with businesses to deliver tailored financial solutions that drive success. Learn more at www.cardworks.com.
Merrick Bank, a wholly-owned subsidiary of CardWorks, specializes in empowering non-prime and near-prime consumers to achieve financial success. Discover how Merrick Bank makes a difference at www.merrickbank.com.
Contacts:
Peter Gilchrist
Ally Communications (Media)
704-644-6299
peter.gilchrist@ally.com
Sean Leary
Ally Investor Relations
704-444-4830
sean.leary@ally.com
Linda Dunbar
CardWorks Communications
513-926-1788
linda.dunbar@cardworks.com
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SOURCE Ally Financial
FAQ
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