On September 6, 2000, Citigroup Inc. and Associates First Capital Corporation announced that Citigroup would acquire Associates in a merger, with closing expected to occur before year-end, pending regulatory and shareholder approval. Under the terms of the merger, Associates shareholders will receive .7334 common shares of Citigroup for each share of Associates common stock. Based on closing prices on September 5, 2000, the value of the transaction to Associates’ shareholders is US$42.49 per share (a 52 per cent premium over Associates closing price on that date) with a total transaction value of approximately US$31.1 billion.
The Associates is the largest publicly traded finance company in the United States, with managed assets of more than US$100 billion and shareholder’s equity of US$10.3 billion and 2,750 offices in the US and 13 other countries, including Canada. Following consummation of the transaction, Associates’ shareholders will own approximately 10 per cent of Citigroup common shares. The merger will accelerate Citigroup’s global expansion in consumer lending, giving it control of the largest publicly-traded finance company in the United States and the fifth-largest consumer finance company in Japan.
This transaction will bring the Associates’ Canadian companies, with total assets of approximately $7.2 billion, into the Citigroup Group. This is the first time in Canada that such a large unregulated finance company business has been acquired by a regulated entity.
Charles Alexander, General Counsel of Citibank Canada, is working with John Teolis of Blake, Cassels & Graydon LLP, assisted by Greg Frenette and Anna MacMillan (corporate), Glenn Leslie and David Fruitman (competition), Dawn Jetten and Melissa Schofield (regulatory), Jim Hausman (tax) and others, to conclude the transaction for Citigroup and Associates and to obtain the necessary Canadian regulatory approvals and deal with Canadian structuring issues.