Springleaf Holdings has agreed to buy Citigroup’s OneMain Financial for $4.25bn in cash, leading to the creation of the largest subprime lender in the US.
The new entity will have $15bn in assets and about 2,000 branches.
Citi will use a portion of the sale proceeds to retire certain funding that presently supports Citi Holdings.
Integration of the sale and the funding retirement is projected to add nearly $1bn to Citi’s pre-tax earnings.
Citi CEO Michael Corbat commented, "OneMain is a great business with talented people, who will now become part of a leading personal finance company. While this business didn’t fit our strategy, it serves customers who deserve and need credit. Today’s announcement is a significant milestone in the simplification of our company and we continue to focus on delivering the potential of our franchise for our clients and shareholders."
Springleaf said it intends to consolidate around 200 branches from mid-2016.
The transaction, subject to regulatory approvals and other customary closing conditions, is scheduled to close in the third quarter of this year.
One Main Financial is a unit of Citi Holdings formed of companies and assets that Citi does not see as part of its core business, and wants to divest or wind down.