Toronto-Do­min­ion bank to buy Chrysler Fi­nan­cial for $6.3 bil­lion

The Pak Banker - - Front Page -

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

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