Toronto-Dominion bank to buy Chrysler Financial for $6.3 billion
TORONTO: TorontoDominion Bank has agreed to buy Chrysler Financial, the automaker's old lending arm, from private equity firm Cerberus Capital Management LP for $6.3 billion.
The deal announced Tuesday is the latest example of a healthy Canadian bank using their muscle to snap up U.S. institutions battered by the financial crisis.
Toronto-Dominion CEO Ed Clark said Canada's second-largest bank is looking to accelerate growth in the U.S and this deal makes them a top five North American auto lender.
"We're taking advantage of a disruptive market to add on assets that in the heydey you could never buy for these kind of prices," Clark said.
New York-based Cerberus bought Chrysler Financial in 2007 as part of the $7.4 billion deal to take over Chrysler's automaking business and lending business. Cerberus handed over control of Chrysler's automaking operations to the government, when the automaker nearly ran out of cash and faced liquidation in 2008.
The car business was a drain on Cerberus, but the financial services business could end up at least breaking even. The private equity firm is expected to recoup its investment in Chrysler Financial, returning some money to investors who had been unhappy with Cerberus' deal with the automaker from the start.
Cerberus hasn't had much success with the auto lending business. In 2006, it purchased General Motor's financing arm, GMAC. -PB News