Ally Financial announced on Wednesday that it has terminated the acquisition and merger deal of CardWorks set for $2.65 billion.
The decision was taken due to the ongoing market fluctuations and economic stress caused by the COVID-19 pandemic. None of the parties will be liable for any termination or break-up fees as the termination of the deal was agreed upon mutually.
“Given the unprecedented economic and market conditions resulting from the COVID-19 global pandemic, Don Berman and I, along with our boards of directors, believe it is in the best interests of our customers and stakeholders to terminate the agreement, ” Jeffrey J. Brown, CEO at Ally Financials, said.
“This was a difficult decision to make following a long process to bring two strong companies together. I want to express my deep appreciation for the considerable efforts and incredible commitment demonstrated by Ally and CardWorks employees.”
A major deal in the financial industry
CardWorks is a major credit card issuer targeting the “non-prime” customers. It has $4.7 billion in assets and $2.9 billion in deposits, the company disclosed during the original merger report.
Upon the set terms, Ally would have paid $1.35 billion in cash and $1.30 billion in common stock, or 39.5 million shares for CardWorks.
If the acquisition and merger deal went through, that would have further diversified Ally’s financial product offerings with both secured and unsecured products. The deal would also have resulted in the merger of Merrick Bank, a wholly-owned subsidiary of CardWorks, into Ally Bank.
“Ally’s long-term strategic priorities remain intact, rooted in a relentless focus on our customers. Our industry-leading businesses and robust capital and liquidity positions will enable us to continue serving as a source of strength during these uncertain times for all of our customers, ” Brown added.