In an effort to augment its retail lending footprint,
The Goldman Sachs Group, Inc. ( GS Quick Quote GS - Free Report) has entered into a definitive agreement to acquire GreenSky, Inc. ( GSKY Quick Quote GSKY - Free Report) , a pre-eminent fintech platform that offers home improvement consumer loan originations.
Since its inception in 2006, GreenSky has been offering simple and transparent home improvement financing solutions to around four million customers across more than $30 billion of loans. With a growing network of more than 10,000 merchants and a proprietary cloud-native technology offering digital point of sale financing solutions, GreenSky’s competitive capabilities will be aligned with Goldman’s online consumer banking platform, Marcus by Goldman Sachs.
David M. Solomon, chairman and CEO of Goldman noted, “GreenSky and its talented team have built an impressive, cloud-native platform that will allow Marcus to reach a new and active set of merchants and customers and provide them with an expanding set of solutions.”
As part of the agreement, Goldman will acquire GreenSky in an all-stock deal. GreenSky stockholders will receive 0.03 shares of Goldman’s common stock for each share held.
Based on Goldman’s share price as of Sep 14 close, it implies a price of $12.11 per GreenSky share, equating the transaction value to around $2.24 billion. The transaction represents a premium of around 56% over GreenSky’s share price as of Sep 14 close.
The boards of directors of both companies approved the transaction. Conditional on the nod from GreenSky stockholders, the receipt of required regulatory approvals, and satisfaction of other customary closing norms, the transaction is expected to close in fourth-quarter 2021 or first-quarter 2022.
GreenSky’s unique lending capabilities and leading merchant and consumer ecosystem will aid Goldman in strengthening its consumer banking unit. Moreover, it provides Goldman an opportunity to leverage on the lender’s growing user base and to tap the $430 billion home improvement market and position it for significant growth.
The acquisition is expected to generate robust returns on invested capital with mid-teens IRR accretion. Also, by strengthening its consumer banking business, the transaction will diversify revenues and propel higher and more durable returns.
The transaction reflects Goldman’s progress in fortifying its consumer business and digital offerings and diversifying income sources. Moreover, since the pandemic, digital businesses and online activity have become indispensable and will continue to gain traction in the upcoming period.
Last month, the company entered into an agreement to acquire Dutch asset manager NN Investment Partners from NN Group N.V. in a €1.6-billion (or $1.9 billion) all-cash transaction. This will improve Goldman’s international presence, and European retail distribution and insurance asset management capabilities.
Over the past year, shares of the company have surged 106.3%, outperforming 84.2% growth recorded by the
industry. Image Source: Zacks Investment Research
Currently, it carries a Zacks Rank #3 (Hold). You can see
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