Ally Financial Inc. announced this week it will buy CardWorks Inc. for $2.65 billion. CardWorks owns Merrick Bank, a major player in merchant acquiring.
In the deal, expected to close in the third quarter, Detroit-based Ally says Merrick Bank will merge into Ally Bank. Merrick has approximately $32 billion in annual transaction volume for 85,000 merchants and 42 independent sales organizations. Ally did not respond to a Digital Transactions News inquiry.
The deal will see Ally pay approximately $1.35 billion in cash and $1.3 billion in Ally stock for Woodbury, N.Y.-based CardWorks. Founded in 1987, CardWorks provides services to the non-prime consumer segment as well as recreational and marine-finance products. In addition to Merrick Bank, which it founded in 1997, CardWorks also owns Carson Smithfield LLC, a collection agency. Don M. Berman is chairman, chief executive, and founder of CardWorks and owns 70% of the firm, Ally says. CardWorks has $4.7 billion in assets and $2.9 billion in deposits, Ally adds.
Ally says the CardWorks acquisition will diversify its product offerings by adding an established credit card platform, a collection service, and a merchant-acquiring business.
“I have tremendous admiration for the three decades of leadership Don Berman has provided as founder and CEO and remain impressed with what the entire team has accomplished in building a resilient, growing business with a commitment to the customer,” Jeffrey J. Brown, Ally chief executive, says in a statement. “Beyond the compelling strategic rationale and financial enhancements this transaction brings, CardWorks is an ideal cultural fit for Ally.”
Berman says the two companies are a good match. “At CardWorks, we’ve successfully built a people-centric, compliance-focused organization enabled by technology with a mission to delight our clients and customers, and Ally represents an ideal partner,” Berman said in the statement. “In leveraging Ally’s commitment to innovation and adaptiveness, the combined company will be well-positioned to meet the financial needs of our ever-growing customer base and deliver sustainable growth and performance.”
Upon closing, Berman will join Ally’s board of directors and become a member of its executive management team.