Stellantis announced yesterday, that the company has entered into a definitive agreement to acquire F1 Holdings Corp., parent company to First Investors Financial Services Group, a leading independent auto finance company in the United States of America, in an all-cash transaction for approximately $285 million, subject to adjustments for closing balance sheet and certain outstanding options from an investor group led by Gallatin Point Capital LLC and including affiliates of Jacobs Asset Management, LLC.
Stellantis’ strategic objective is to establish a U.S. captive finance company to support its sales and fully capitalize on its strong market position while creating long-term value for Stellantis shareholders. The acquisition of First Investors allows Stellantis to create a platform from which to grow a full-service captive finance organization. First Investors is based in Houston, Texas.
Stellantis is the only major OEM currently operating in the U.S. without a captive auto finance company. The transaction represents a meaningful strategic opportunity, with significant potential for accretive earnings generation and improving customer loyalty. A captive U.S. finance company will enhance the ownership experience and connectivity in the digital age for customers who purchase its award-winning Chrysler, Dodge, Jeep®, Ram, FIAT, and Alfa Romeo vehicles, and provide future opportunities to enable emerging business strategies.
Currently, the Chrysler Group has continued to deal with Santander Consumer USA Holdings Inc. which oversees the daily operations for Chrysler Capital. The Chrysler Capital identity was created in 2013, before the merger between Chrysler and FIAT to offer lending services for Chrysler Group vehicles. The acquisition of First Investors doesn’t look good for Santander, although it is saying that it will have “ongoing conversations with Stellantis about long-term mutually beneficial opportunities beyond 2023.”
Santander’s U.S.-listed stock fell almost 1.5% during trading on Wednesday after Bloomberg reported that Stellantis was going to announce the acquisition of First Investors. Stellantis stock, on the other hand, rose 1.3% in Paris after the announcement was made.
During the last quarter, which ended in June, Chrysler Capital stated that it financed 33.8% of Stellantis’ vehicle sales in the United States during that time. That means that Santander is one of the biggest providers of loans to those who borrow with less-than-perfect credit in the U.S.
“This transaction marks a significant milestone in Stellantis’ sales finance strategy in the critical U.S. market. First Investors has an outstanding financial and operational platform, underpinned by a strong management team, with vast experience in the auto finance space,” said Stellantis CEO, Carlos Tavares. ”Direct ownership of a finance company in the U.S. is a white-space opportunity that will allow Stellantis to provide our customers and dealers a complete range of financing options, including retail loans, leases, and floorplan financing in the near-to-medium term.”
“We are excited to join the Stellantis team. Becoming part of Stellantis provides long-term stability for our company and employees. We believe that there are significant untapped growth opportunities for First Investors under Stellantis ownership as we expand our product suite to support the auto sales growth of Stellantis,“ stated Tommy Moore, Jr., President & CEO of First Investors. ”The First Investors management team is fully committed to ensuring a smooth and rapid integration into Stellantis. Meanwhile, we remain committed to continuing to offer our loans and services to our existing network of dealers and current business partners.”
The deal is expected to close by the end of the year and is subject to the customary closing conditions and regulatory approvals.