GM to buy auto financing company AmeriCredit for $3.5 billion

General Motors, once America's largest automaker, yesterday said that it will buy auto financing company AmeriCredit Corp for $3.5 billion in cash to meet customer demand for leasing and non-prime financing for its vehicles.

With sales of the company vehicles in China surpassing sales in the US market, which it dominated for decades, (See: GM's China sales overtake its US market for the first time), GM plans to increase sales at home by offering credit finance to consumers with lower credit ratings.

GM has offered to buy AmeriCredit in an all-cash transaction valuing the auto financing company at approximately $3.5 billion, or about $24.50 a share.

''This acquisition supports our efforts to design, build and sell the world's best vehicles by expanding the financing options we can offer to consumers who want to buy GM vehicles," said Ed Whitacre, chairman and CEO of GM.

The acquisition will give GM, which is 61 per cent owned by the US government, a "captive finance unit" or non-prime financing for its customers for the first time after it sold GMAC Financial Services to private equity firm Cerberus in 2006, but still owns a 15 per cent stake in the company.

AmeriCredit, based in Fort Worth, employs 3,000 people in the US and Canada, has 800,000 customers, $9 billion in auto receivables and total assets of approximately $10 billion. It already serves customers of about 4,000 GM dealers spread across North America.