By Peter OBIORA InvestAdvocate
Lagos (INVFESTADVOCATE)-Citigroup said on Tuesday it has reached a deal to to sell OneMain Financial Holdings, Inc. to Springleaf Holdings for a purchase price of $4.25 billion.
“The deal is expected to close in the third quarter of 2015, subject to regulatory approvals and other customary closing conditions,” the global financial institution said in statement.
Citi CEO Michael Corbat said: “OneMain is a great business with talented people, who will now become part of a leading personal finance company. While this business didn’t fit our strategy, it serves customers who deserve and need credit. Today’s announcement is a significant milestone in the simplification of our company and we continue to focus on delivering the potential of our franchise for our clients and shareholders.”
Citi disclosed that the sale, along with retirement of the related funding, are expected to result in a net addition to earnings before income taxes of approximately $1 billion.
According to the financial institution, it will use a portion of the proceeds from this sale to retire certain funding that currently supports Citi Holdings. Citi’s Institutional Clients Group advised Citi on this transaction.
OneMain Financial has been reported as part of Citi Holdings, which was established in 2009 and consists of businesses and portfolios of assets that Citi has determined are not central to its core franchise. Since its creation, Citi has sold more than 60 businesses and reduced assets in Citi Holdings by more than $700 billion. As of December 31, 2014, Citi Holdings’ assets represented approximately 5 percent of total Citi assets, down from a peak of more than 30 percent.
Barclays, Credit Sussie, Goldman Sachs, and Bank of America Merrill Lynch are Springleaf’s financial advisers, while Skadden Arps Slate Meagher & Flom LLP is legal counsel.
While Citi is OneMain’s financial adviser and Davis Polk & Wardwell is its legal adviser.
Shares of Citigroup’s climbed up nearly one (1) percent at $54 in premarket trading on Tuesday.
