CardWorks and Ally Financial Announce Mutual Termination of Merger Agreement

Rhea-AI Summary

On June 24, 2020, Cardholder Management Services, Inc. and Ally Financial Inc. announced the mutual termination of their previously agreed merger, originally disclosed on February 18, 2020. This decision, made by both boards, is a response to the economic challenges posed by the COVID-19 pandemic. Neither company will incur termination fees. CardWorks emphasizes its strong financial health and commitment to growth despite market uncertainties.

Positive

• Both companies avoid incurring termination fees, preserving capital.
• CardWorks asserts strong financial stability and ongoing successful operations.

Negative

• Termination of merger may hinder potential synergies and market expansion.
• Uncertain economic environment may pose future risks.

WOODBURY, N.Y., June 24, 2020 /PRNewswire/ -- Cardholder Management Services, Inc. ("CardWorks") and Ally Financial Inc. (NYSE: ALLY) today announced that the companies have mutually agreed to terminate their merger agreement, previously announced on February 18, 2020, under which Ally had agreed to acquire CardWorks. Neither party will be required to pay the other a termination fee or break-up fee as a result of the mutual decision to terminate the agreement. The termination was approved by the boards of directors of both companies and is in response to the fluctuating unprecedented economic and market conditions resulting from the COVID-19 global pandemic.

"After careful consideration, Jeff Brown and I, along with our boards of directors, concluded that it would be in the best interest of our customers and our stakeholders, to terminate the agreement," said CardWorks Founder, Chairman and Chief Executive Officer Don Berman. "CardWorks has proven through previous recessions to be a great company in difficult times. CardWorks is in an exceptionally strong financial position and our long-term strategic priorities remain intact. Each of our business lines continues to perform extremely well during these challenging and uncertain times.  We have been focused on the well-being of our people and our communities during our entire 32-year history, including through these difficult events of 2020.  As a private company we are excited to continue to grow our unique business and execute on our long term strategic initiatives while delighting our clients and customers." 

About CardWorks

Founded in 1987, CardWorks is a consumer finance lender and servicer, and a people-centric, compliance-focused organization enabled by data and technology. CardWorks is a leading servicer of nationally-branded MasterCard/Visa cards, private label cards, secured cards, and other unique products, as well as secured and unsecured installment loans.

Merrick Bank, founded in 1997 as a wholly owned subsidiary of CardWorks, is an FDIC insured top-20 U.S. issuer of Visa® branded credit cards. Merrick Bank also provides finance options to consumers through marine and recreational vehicle dealers throughout the country. While Merrick Bank specializes in non-prime consumer lending, it is also a top-15 U.S. credit card merchant acquirer, clearing approximately $32 billion in transaction volume per year for 85,000 merchants and 42 independent sales organizations. 

For more information, visit www.cardworks.com and www.merrickbank.com  

About Ally Financial Inc.

Ally Financial Inc. (NYSE: ALLY) is a leading digital financial-services company with $182.5 billion in assets as of March 31, 2020. As a customer-centric company with passionate customer service and innovative financial solutions, we are relentlessly focused on "Doing it Right" and being a trusted financial-services provider to our consumer, commercial, and corporate customers. We are one of the largest full-service automotive-finance operations in the country and offer a wide range of financial services and insurance products to automotive dealerships and consumers. Our award-winning online bank (Ally Bank, Member FDIC and Equal Housing Lender) offers mortgage lending, personal lending, and a variety of deposit and other banking products, including savings, money-market, and checking accounts, certificates of deposit (CDs), and individual retirement accounts (IRAs). Additionally, we offer securities-brokerage and investment-advisory services through Ally Invest. Our robust corporate finance business offers capital for equity sponsors and middle-market companies.

For more information and disclosures about Ally, visit https://www.ally.com/#disclosures.

Contact:
Erica Berman
CardWorks
407.358.3200  x1220
erica.berman@cardworks.com

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SOURCE CardWorks

FAQ

Why did Ally Financial terminate the merger with CardWorks?

The merger was terminated due to fluctuating economic conditions from the COVID-19 pandemic.

When was the merger agreement between Ally Financial and CardWorks announced?

The merger agreement was announced on February 18, 2020.

Will there be any termination fees from the Ally and CardWorks merger termination?

No termination fees will be paid by either party as a result of the mutual decision.

What is the current financial position of CardWorks after the merger termination?

CardWorks stated it is in a strong financial position and continues to perform well.

How might the termination of the merger affect Ally Financial's strategy?

The termination may impact Ally's strategic growth plans by limiting potential synergies.