Ally Financial, a US-based financial services firm, has agreed to divest its credit card business to CardWorks as part of its efforts to streamline operations and focus on core business areas.
The transaction will see CardWorks and its subsidiary, Merrick Bank, acquire Ally’s credit card portfolio valued at $2.3 billion, which includes 1.3 million active cardholders as of 31 December 2024.
Ally CEO Michael Rhodes said: “Ally’s decision to sell its credit card business is part of our broader strategy to pursue a more focused approach, enabling us to simplify and streamline our structure, prioritize our core businesses, and drive improved returns.
“We are proud of the results the business generated over the last three years and pleased with the terms of the agreement and the opportunity for this business to continue growing with CardWorks.
“As we embark on the next chapter at Ally, we remain relentlessly focused on doing right by our customers, communities, employees and shareholders.”
Both companies have confirmed plans to collaborate closely to ensure a seamless transition for affected customers and employees.
CardWorks CEO Dan Pillemer said: “This portfolio and platform acquisition is an exciting step in the expansion of our near-prime credit card business and a natural fit for us.
“As servicing partner to the platform since inception, we have always admired this talented team and are thrilled to add them to the CardWorks and Merrick Bank family.”
The transaction is anticipated to be completed in 2025, subject to regulatory approvals and customary closing conditions.
J.P. Morgan Securities acted as Ally’s financial advisor, with Sullivan & Cromwell providing legal counsel. CardWorks was represented by Cravath, Swaine & Moore as its legal advisor.
This divestiture follows a similar move by Ally in January 2024, when the firm sold its point-of-sale financing business to Synchrony Financial.
The deal, which included $2.2bn in loan receivables, encompassed relationships with approximately 2,500 merchants and served over 450,000 active borrowers in sectors, such as home improvement and healthcare.
