22 Dec 2010

Canadian bank to buy carmaker's finance arm

12:58 pm on 22 December 2010

Toronto-Dominion Bank of Canada is to buy Chrysler Financial from private equity firm Cerberus Capital Management for $US6.3 billion.

The price includes $US5.9 billion for the company's assets and $US400 million of goodwill.

TD boss Ed Clark said the deal would make the combined company one of the "top five auto lenders" in the US.

Chrysler Financial is the former lending arm of the carmaker that was bailed out by the US government last year and is now owned by Italy's Fiat.

"This transaction represents a unique opportunity to purchase a great organic growth platform at an attractive price," Mr Clark said.

"Chrysler Financial is a well-run business with the capacity for significantly higher returns over the next several years."

The BBC reports Cerberus lost control of Chrysler when the company went into bankruptcy protection last year after sales slumped during the global downturn. However, it kept control of the carmaker's finance arm.