General Motors Co. will pay US$3.5 billion to buy sub-prime lender AmeriCredit Corp. to expand its auto lending and leasing operations, GM announced in a statement on Thursday.

"This acquisition supports our efforts to design, build and sell the world's best vehicles by expanding the financing options we can offer to consumers who want to buy GM vehicles," said Ed Whitacre, GM chairman and CEO. "Adding AmeriCredit to our team will improve our competitiveness in auto financing offerings, and I am very pleased to have them on board."

A big factor in the deal is GM's failure to underwrite as many leases as other automakers. In the first six months of the year, leasing accounted for just 7 percent of GM deals -- compared with 21 percent for the rest of the auto industry.

For months, GM has been eager to do more to expand its lending and leasing options -- especially for customers with poorer credit scores.

GM said the deal "establishes the core of a new GM captive financing arm that will enable GM to provide customers with a more complete range of financing options."

AmeriCredit President and Chief Executive Officer Daniel Berce said: "We're excited about joining the GM team. While we will be expanding our product set to more fully support GM, we'll continue to offer our loan products to the more than 11,000 dealers across the country we serve today. Long term, this transaction will deliver benefits to our dealers, customers and employees."

The highly regarded AmeriCredit management team will remain intact, which will assist in minimizing integration risk and maximizing opportunities between the two companies, the statement said.

With total assets of approximately US$10 billion, the acquisition of AmeriCredit poses minimal impact to GM's balance sheet, and does not change GM's objective of achieving strong investment grade status. Under GM ownership, AmeriCredit will maintain its own direct access to the capital markets for its financing requirements.

The transaction is expected to close by the end of the fourth quarter of 2010, pending certain closing conditions, including the approval of AmeriCredit shareholders.

(Xinhua News Agency July 23, 2010)