Why Shares of Ally Financial Are Falling Today
Shares of Ally Financial (NYSE: ALLY) fell more than 10% on Wednesday after the online bank announced a $2.65 billion deal to acquire subprime lender CardWorks. The deal would diversify Ally's offerings, but at a steep price.
Ally is paying $1.35 billion in cash and 39.5 million shares for CardWorks, a privately held lender with $4.7 billion in assets and $2.9 billion in deposits. Ally, which is primarily an auto lender, issued a statement saying that buying CardWorks would diversify its product offering by adding an established credit card platform and a nationwide merchant acquiring business.
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