This acquisition includes $2.2 billion of loan receivables and relationships with 2,500 merchant locations and 450,000 active borrowers, the companies said in a Friday (Jan. 19) press release.
It will allow Synchrony to enhance its presence in the home improvement and health and wellness financing sectors, according to the release. Synchrony plans to offer both revolving credit and installment loans at the point-of-sale in the home improvement vertical.
“This accretive acquisition enhances Synchrony’s position by offering our multi-product portfolio to nearly 2,500 Ally Lending merchant locations, and enables us to achieve attractive economies of scale while further diversifying our merchant base,” Brian Doubles, president and CEO of Synchrony, said in the release.
For Ally, the transaction will allow the company to optimize risk-adjusted returns, according to the release.
“Today’s agreement to sell Ally Lending is part of a broader initiative to invest resources in growing scale businesses and strengthening relationships with dealer customers and consumers,” Jeff Brown, CEO of Ally Financial, said in the release.
Subject to customary closing conditions, the transaction is expected to close in the first quarter of 2024, per the release. Synchrony and Ally will work together to ensure a smooth transition for merchants, customers and employees.
Consumers are increasingly looking for cost-effective options when it comes to healthcare, Beto Casellas, executive vice president and CEO of health and wellness at Synchrony, told PYMNTS in an interview posted Jan. 8.
That demand is expected to continue to grow in 2024 as people exhaust the savings they accumulated during the pandemic and the economy slows, Casellas said.
“Recognizing this, we observe a surge in healthcare consumerism, with more individuals actively seeking cost-effective options,” Casellas said.
In other recent news from Ally Financial, the company said on Jan. 12 that its president of dealer financial services, Douglas Timmerman, will assume the role of interim CEO on Feb. 1 after Brown steps down from the role of CEO on Jan. 31. Brown will become president of automotive retail organization Hendrick Automotive Group.