On January 22, Ally Financial announced the sale of its credit card business to CardWorks, a credit and payments firm. The agreement led to an 8.6% increase in Ally's premarket shares. This move reflects Ally's strategy to simplify its operations and concentrate on its core activities. The deal involves the transfer of Ally's $2.3 billion in credit card receivables and its customer base of 1.3 million cardholders as of December 31.
CardWorks' CEO, Dan Pillemer, expressed enthusiasm about the acquisition, stating that, "This portfolio and platform acquisition is an exciting step in the expansion of our near-prime credit card business." The transaction is set to be finalized by 2025. In a similar move last year, Ally sold its lending business to Synchrony Financial, which included loan receivables valued at $2.2 billion.
For this recent deal, Ally received advisory services from J.P. Morgan Securities and Sullivan & Cromwell, while CardWorks was advised by Cravath and Swaine & Moore.