Beneficial Corporation announced Tuesday afternoon a definitive agreement to sell its Canadian subsidiary, Beneficial Canada Holdings Inc., to Associates First Capital Corporation. The sale is subject to corporate and regulatory approvals. Terms of the agreement were not disclosed, although Beneficial expects to record a net aftertax gain of more than $100 million in the first quarter.
Beneficial Canada has 105 offices and C$1.1 billion in net receivables.
In October, Beneficial Corporation announced that, as a result of a recent strategic review, it would sell its Canadian and German consumer finance subsidiaries and focus on its core U.S. consumer financial services businesses, including consumer finance, related credit insurance, private-label credit card, and its highly profitable United Kingdom and Irish operations. The company also plans to sell certain real estate holdings in New Jersey and Florida. A contract for sale of 580 acres of land in Peapack Gladstone and Bedminister, N.J., was announced on Jan. 30.
Proceeds from the sale will be reinvested in the core business, which is currently in the midst of a major reengineering project designed to improve loan growth, increase efficiency and significantly improve profitability. The proceeds will also effectively finance the company’s current 3 million-share equity repurchase program.
Beneficial Corporation is a $17 billion, New York Stock Exchange-listed financial services holding company. Subsidiaries of the Company provide financial services through their various consumer finance, credit- card, banking and insurance operations located throughout the United States, the United Kingdom, Ireland, and Germany.
OFFICIAL STATEMENT FROM ASSOCIATES
Associates First Capital Corporation announced that it has signed a definitive agreement to purchase Beneficial Canada Holdings Incorporated, the Canadian consumer finance subsidiary of Beneficial Corporation. The acquisition is subject to regulatory and corporate approvals. Terms were not disclosed.
Beneficial Canada has 105 offices and C$1.1 billion in net receivables. The acquisition will significantly expand The Associates consumer finance network across Canada, according to Keith W. Hughes, the company’s chairman and chief executive officer.
“Beneficial has a branch distribution network that serves consumers in all 10 provinces. Its diverse portfolio and emphasis on quality customer service fit well with our existing consumer and commercial finance operations in Canada,” Mr. Hughes said. “Beneficial has experienced management and an excellent employee base that we are pleased to welcome to our organization.”
The Beneficial portfolio includes mortgage loans, personal loans, private label credit card and sales finance receivables.
The Associates has had lending operations in Canada for more than 20 years. It currently provides consumer and commercial financing in Canada, including the financing and leasing of trucks, heavy equipment and telecommunications equipment. In 1997, The Associates acquired Superior Acceptance Corporation, which added 91 offices to the consumer branch network.
With the acquisition of Beneficial Canada, The Associates will have 635,000 customers and total net receivables of C$2.8 billion in Canada. It will be the largest foreign-owned diversified finance company in Canada.
Associates First Capital Corporation is the largest publicly traded finance company in the United States, providing consumer and commercial finance, leasing and related services through 2,265 offices in the U.S. and internationally. Based in Dallas, it is a majority-owned subsidiary of Ford Motor Company.Details