Springleaf to buy Citi's OneMain to become top U.S. subprime lender
By Avik Das
(Reuters) - Springleaf Holdings Inc (LEAF.N: Quote) said it would buy Citigroup Inc's (C.N: Quote) OneMain Financial Holdings Inc for $4.25 billion in cash, creating the largest subprime lender in the United States.
Citigroup has been seeking to hive off OneMain since at least 2011 as part of the No. 3 U.S. bank's plan to sell unwanted assets and focus on wealthier clients.
The deal will create a lender with $15 billion in assets and nearly 2,000 branches, serving the large and growing population of non-prime customers in the United States.
Springleaf shares soared 38 percent to a record $52.44 on Tuesday. Citigroup's shares were marginally higher at $53.73.
The deal with Springleaf for Citi's most profitable business was widely expected, but the price was less than what many analysts had anticipated. Reuters reported on Feb. 20 that the deal was close.
Jefferies & Co, reiterating its "buy" rating on Springleaf's stock, said it had expected OneMain to fetch $5 billion.
OneMain, which provides loans to meet unexpected expenses and to buy small-ticket items, has been profitable since posting a $2 billion loss in 2010. Profit rose 7 percent to $415 million in the nine months ended September.
OneMain has 1,140 branches in the United States, compared with Citibank's 849. Continued...