TD Bank to Buy Chrysler Financial
The agreement for the sale of Chrysler Financial was revealed today, with the deal to cover both the American and Canadian divisions of Chrysler Financial. TD will take over the institution's processes, technology, and portfolio of retail assets on both sides of the border.
Following the completion of the sale, the new group is expected to rank in the top five bank-owned auto lenders in North America, with an estimated 1 million customers. TD decided to buy Chrysler Financial as it hopes it will get a return on invested capital of approximately 20 percent in three to four years.
"This transaction represents a unique opportunity to purchase a great organic growth platform at an attractive price," said Ed Clark, TD CEO.
"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 the parties involved, the full year of operation of Chrysler Financial under the new ownership will be 2012. The deal is expected to be neutral to earnings in 2011 on an adjusted basis and will add approximately $100 million in adjusted earnings in 2012.
“This transaction with TD is the right next step for the future of these businesses, their employees and customers," said Mark Neporent, Cerberus COO. "It ensures that the acquired businesses will be part of a strong and well-capitalized financial institution, which will help create sustainable jobs."