General Motors – which was bailed out by the government – is buying back part of Ally Financial, which was also bailed out by the government. But it needs no government approval. Reuters explains:
GM is also still partially owned by the U.S. government after a series of bailouts during the financial crisis and the companies also have an intertwined history: Ally is the former financing arm of GM and was once known as GMAC.
The automaker has been gradually rebuilding its finance operations since selling a controlling stake in GMAC to private equity firm Cerberus Capital Management in 2006.
“We’re bringing those parts of Ally back into the family,” said Dan Ammann, GM’s chief financial officer, on a conference call with reporters.
Ally still owes the U.S. over $11 billion. GM will pay about $4.2 billion to purchase the European and Latin American division of Ally.
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