Ally Financial Inc. (ALLY - Free Report) recently announced that the acquisition of CardWorks, a credit card issuer with focus on the “non-prime” segment, has been called off due to the uncertainties related to the coronavirus pandemic.
The acquisition deal, announced this February, was likely to close in the third quarter of 2020. Ally Financial was expected to fund the transaction with $1.35 billion in cash and $1.30 billion in its common stock, amounting to a total consideration of $2.65 billion. As the deal has been mutually terminated, therefore neither of the parties needs to pay any termination or break-up fee.
Don Berman, CardWorks chief executive officer said, "After careful consideration, Jeff Brown and I, along with our boards of directors, concluded that it would be in the best interest of our customers and our stakeholders, to terminate the agreement." The boards of both companies have approved the termination.
Ally Financial has been diversifying its product offerings with notable acquisitions earlier. The company acquired TradeKing, a digital wealth management firm, in 2016. In 2019, it bought Health Credit Services LLC, a point-of-sale payment provider.
Shares of this Zacks Rank #4 (Sell) company have lost 38.6%, over the past year, compared with the 23.8% decline recorded by the industry.
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The coronavirus crisis and related economic uncertainties have resulted in the termination of certain other major merger deals as well. This includes Medley Capital’s (MCC - Free Report) merger with Sierra Income Corp., the agreement for which was signed in 2018. Another notable deal to have been terminated involves Texas Capital Bancshares (TCBI - Free Report) and Independent Bank Group (IBTX - Free Report) . The all-stock merger deal was announced in December 2019.
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