Personal finance company Springleaf Holdings announced today (March 3rd) that it agreed to purchase OneMain Financial lender from Citigroup Inc for $4.25 billion (£2.75 billion) in cash. The combined firm would be the biggest subprime lender in the USA, according to the Wall Street Journal.
Jay Levine, Springleaf's chief executive officer, said in a press release: "This is a transformational transaction, bringing together two best-in-class personal finance businesses to create a combined company that we believe is financially strong and optimized for growth."
"With complementary branch networks, a leading digital presence, and an ongoing commitment to responsible lending practices, we are positioned to serve a significant portion of Americans," he added.
$15 billion in assets
OneMain provides personal loans for meeting unexpected expenses and for buying small items. Its assets as of September 2014 were worth $9.72 billion. It is part of Citi Holdings, which Citigroup created during the financial crisis.
Citigroup will use a part of the proceeds from the sale to retire certain funding that currently supports Citi Holdings, the bank said in a statement. The sale, along with retirement of the related funding, are expected to result in a net addition to earnings before income taxes of around $1 billion.
The combined company will have $15 billion in assets and operate through nearly 2,000 branches across the country.
The boards at Springleaf and Citigroup have approved the deal, which is expected to close in the third quarter of 2015, subject to regulatory approvals, Springleaf said.
Citigroup's shares were up nearly one per cent at $54 in premarket trading this morning.