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Toronto-Dominion to buy Chrysler Financial for $6.3 billion

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Toronto-Dominion to buy Chrysler Financial for $6.3 billion

Automotive News -- December 21, 2010 - 8:11 am ET

TORONTO (Reuters) -- Toronto-Dominion Bank will buy Chrysler Financial from private equity firm Cerberus Capital Management for $6.3 billion, making Canada's No. 2 bank one of North America's top five bank-owned auto lenders.

TD said today the purchase consists of net assets of $5.9 billion and about $400 million in goodwill.

Under the terms of the agreement, Toronto-Dominion's U.S. unit -- TD Bank -- will acquire Chrysler Financial in the United States, and TD will acquire Chrysler Financial in Canada.

TD, which has been looking to expand its loan book, said the deal will give it all of Chrysler Financial's processes and technology as well as its existing portfolio of retail assets.

The deal is just the latest in a series of foreign asset purchases by Canada's big banks, which exited the financial crisis in stronger shape than most rivals, and have been seeking to capitalize by buying up assets.

"This transaction represents a unique opportunity to purchase a great organic-growth platform at an attractive price," Ed Clark, chief executive of TD, said in a statement.

"Chrysler Financial is a well-run business with the capacity for significantly higher returns over the next several years. This acquisition will allow us to leverage our lending expertise and financial strength to expand our presence in a large North American market with tremendous potential upside."

TD said the addition of Chrysler Financial's dealer clients, which serve about 1 million customers, could generate a return on invested capital of about 20 percent in three to four years.

Chrysler Financial, the former lending arm of the automaker, had its operations reduced as part of a U.S. government-sponsored restructuring of Chrysler and General Motors last year.

Cerberus bought Chrysler in 2007, but lost control of the automaker during its restructuring. It held on to the financing company.

Ally Financial Inc, the auto and mortgage lender formerly known as GMAC, became the preferred lender to Chrysler in connection with the restructuring.

TD's U.S. operations include the TD Bank network on the East Coast, and it owns just under half of online broker TD Ameritrade TD has made small U.S. retail bank acquisitions in the last two years and bought Commerce Bancorp Inc for $7.7 billion in 2007.

TD said it does not intend to issue common equity in connection with the deal.

Read more: http://www.autonews.com/apps/pbcs.dll/article?AID=/20101221/RETAIL/101229979/1421#ixzz18kjpn2of

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TD BANK BUYS CHRYSLER FINANCIAL

By Drew Johnson

Following early sale rumors, Cerberus Capital Management has officially sold its Chrysler Financial unit to Toronto-Dominion Bank. Cerberus acquired Chrysler Financial through its 2007 purchase of Chrysler.

Toronto-Dominion Bank paid $6.3 billion for the auto finance division, which included $5.9 billion in assets and $400 million in goodwill. Chrysler Financial was believed to have a book value between $6 billion and $7 billion.

“This transaction represents a unique opportunity to purchase a great organic growth platform at an attractive price,” said Ed Clark, Group President and CEO, TD. “Chrysler Financial is a well-run business with the capacity for significantly higher returns over the next several years. This acquisition will allow us to leverage our lending expertise and financial strength to expand our presence in a large North American market with tremendous potential upside.”

According to Toronto-Dominion Chief Financial Officer Colleen Johnston, Chrysler Financial is expected to add about $600 million per year to the company’s bottom line by 2013. Chrysler Financial, which has 1,850 employees, is expected to have $7.5 billion in loans when the deal officially closes.

Cerberus paid Daimler $7.4 billion for Chrysler, which included the sale of Chrysler Financial.

link:

http://www.leftlanenews.com/td-bank-buys-chrysler-financial.html

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Since Canada couldn't get Chrysler the first time, we're taking it from you piece by piece. By 2016, if projections are accurate, we will be seeing a full lineup of Chrysler zamboni's and dog sleds.

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Bank to buy Chrysler Financial for $6.3B

David Shepardson / Detroit News Washington Bureau

Washington— A Canadian bank agreed to buy Chrysler Financial in a $6.3 billion deal that gives the auto lender a second lease on life and saves hundreds of jobs in Metro Detroit.

Toronto-based TD Bank Group said Tuesday it is buying the Farmington Hills-based lender from Cerberus Capital Management LP, the New York private equity firm that acquired Chrysler Financial and Chrysler LLC from Germany's Daimler AG in 2007.

The company will drop the Chrysler Financial brand early next year once the deal is approved by U.S. and Canadian regulators.

Chrysler Financial CEO Tom Gilman said the company had been on track to liquidate next year, or at least end up a much smaller standalone company, a move "that would have required significant manpower reductions."

"We never believed that the ultimate solution was to turn off the lights and lay everybody off," Gilman told The Detroit News in an interview. "For southeast Michigan, this is a great success story."

The sale is a sign that the auto finance market is improving and more banks want to get into the business.

"People are gaining a little more confidence in the auto industry," said Rebecca Lindland, an auto analyst with IHS Automotive in Lexington, Mass. "Investors are starting to realize that if you are careful and diligent you can make money."

Chrysler Financial's work force is down to 1,850 employees, about half of them in Michigan. The lender slashed more than 50 percent of its staff — about 2,000 positions — during the last two years. The company also has offices in Dallas and Jacksonville, Fla.

Chrysler Financial's loan portfolio fell to under $10 billion in the last year, from $50 billion, and it stopped underwriting new loans. For most of that time, the company was simply winding down its portfolio.

As the markets improved, Chrysler Financial resumed some modest lending last summer.

In September, the company began serious talks with TD Bank Group, which includes Toronto-Dominion Bank and its subsidiaries, about a possible acquisition. TD's U.S. subsidiary is known as TD Bank.

TD officials said they expected some overlap with the deal but did not outline any additional cost cuts for Chrysler Financial. Gilman said if the company is successful, he expects "there's going to be an opportunity for adding jobs."

Chrysler Financial was spun off as a separate company after former parent Chrysler LLC filed for bankruptcy in 2009. Under the terms of the deal, Chrysler's lending business was turned over to Ally Financial Inc., the former Detroit-based GMAC. Chrysler Financial must stop using the Ally name in June

.

TD Bank essentially is paying the fair-market value, $5.9 billion, for Chrysler's $7.5 billion loan portfolio, plus an additional $400 million premium.

About 70 percent of Chrysler Financial's loan portfolio is for people with prime credit scores - buyers with the best credit — and the company plans to focus on those buyers.

"Joining forces with TD will benefit both our customers and our dealer network," Gilman said. "We've never lost the ability to think like car people. We think like dealers and we know how to advise them and how to help them make money. We want to develop relationships" with other automakers' dealers.

Under the terms of the agreement, TD's U.S. arm, TD Bank, will acquire Chrysler Financial in the United States and TD will acquire Chrysler Financial in Canada. The business will be one of the top 5 bank-owned auto lenders in North America.

"This transaction represents a unique opportunity to purchase a great organic growth platform at an attractive price," said TD Bank Group President and CEO Ed Clark. "Chrysler Financial is a well-run business with the capacity for significantly higher returns over the next several years."

The sale also ends Cerberus Capital Management's plan to create a massive auto lending arm. Cerberus acquired Chrysler, the automaker, in a $7.4 billion deal in 2007, and held 51 percent of what is now Ally Financial. The firm now owns just 14.9 percent of Ally.

Cerberus will retain about $1 billion of the loans on Chrysler Financial's books.

"This transaction with TD is the right next step for the future of these businesses, their employees and customers," said Mark Neporent, Cerberus' senior managing director and chief operating officer.

In addition to the existing dealer relationships that TD has in Canada and the United States, Chrysler Financial's dealer clients serve approximately 1 million customers.

Chrysler Financial received a $1.5 billion bailout from the Treasury Department in January 2009 and paid it back in full.

TD Bank is one of the 15 largest commercial banks in the United States with $142 billion in assets and has more than 1,000 locations from Maine to Florida, but none in Michigan.

From The Detroit News: http://detnews.com/article/20101222/AUTO01/12220336/Bank-to-buy-Chrysler-Financial-for-$6.3B#ixzz18qZkAR3F

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Toronto bank to get Chrysler lender

By ROB GILLIES and SHARON SILKE CARTY

Associated Press

Toronto-Dominion Bank has agreed to buy Chrysler Financial, the automaker's old lending arm, from private-equity firm Cerberus Capital Management for $6.3 billion.

The deal announced Tuesday is the latest example of a healthy Canadian bank using its 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 it a Top 5 North American auto lender.

"We're taking advantage of a disruptive market to add on assets that in the heyday you could never buy for these kind of prices," Clark said in an interview with the Associated Press.

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 auto-making operations to the government, when the automaker nearly ran out of cash and faced liquidation in 2008.

Cerberus hasn't had much success with the auto lending business.

Read more: Toronto bank to get Chrysler lender | freep.com | Detroit Free Press http://www.freep.com/article/20101222/BUSINESS01/12220412/Toronto-bank-to-get-Chrysler-lender#ixzz18qamPSp0

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Report: Chrysler Financial purchased by TD Bank for $6.3B

by Zach Bowman (RSS feed) on Dec 22nd 2010 at 1:59PM

Toronto Dominion Bank has officially agreed to acquire Chrysler Financial. Cerberus Capital Management, the current owner of the Pentastar's lending arm, will receive $6.3 billion from TD Bank in the deal. That figure marks a $900 million loss compared to the $7.4 billion that Cerberus paid for Chrysler financial in 2007 as part of the automaker's takeover. Since then, Cerberus has been forced to hand the reins to the federal government as part of the bailout of 2008, and analysts from The Washington Post and Reuters feel that the capital firm is simply looking to be able to return some of the money that it lost on the Chrysler adventure to investors.

Meanwhile, Toronto-Dominion Bank continues to push its way into the American market. The bank already has 1,300 branches on our shores, and the new acquisition of Chrysler Financial will make the company one of America's largest auto lenders overnight. TD Bank says that it anticipates auto lending to grow from a $700 billion business right now to over $900 billion in just three short years. With Chrysler's ever-improving stable of products, if true, that likely means that the bank will see cash start rolling through its doors in a big way. Thanks to everyone for the tips!

link:

http://www.autoblog.com/2010/12/22/report-chrysler-financial-purchased-by-td-bank-for-6-3b/

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