The coronavirus pandemic has sabotaged another merger in the financial services space.
Late on Wednesday, Ally Financial and Cardholder Management Services (CardWorks) announced that they had mutually agreed to terminate their merger agreement, which was first published on February 18.
According to a press release, each company’s board of directors has approved the termination after carefully weighing the significant impact COVID-19 will have on global markets and the economy. Officials said none of the parties will incur termination or dissolution fees as a result of the amicable decision to terminate the merger agreement.
“Given the unprecedented economic and market conditions resulting from the global COVID-19 pandemic, Don Berman and I, along with our boards of directors, believe that it is in the best interests of our customers and stakeholders to terminate the agreement,” said Ally – Chief said Officer Jeffrey Brown. “This was a difficult decision after a long process of bringing two strong companies together. I would like to express my deep appreciation for the considerable effort and incredible dedication of the Ally and CardWorks staff.
“Ally’s long-term strategic priorities remain intact and are rooted in an unrelenting focus on our customers,” continued Brown. “Our industry-leading businesses and our solid capital and liquidity position will enable us to continue serving as a source of strength for all of our customers in these uncertain times. We will use these strengths as we grow and diversify our company in the future. Ally is resilient and adaptable, powered by a vibrant, inclusive culture that will continue to ‘do right’ for our customers, our communities and our shareholders. “
CardWorks is a leading provider of nationally branded MasterCard / Visa cards, private label cards, secured cards and other unique products, as well as secured and unsecured installment loans.
“After careful consideration, Jeff Brown and I, along with our board members, concluded that it would be in the best interests of our customers and stakeholders to terminate the agreement,” CardWorks Founder, Chairman and Chief Executive Officer Don Bermanman said in a separate Press release. “CardWorks has proven itself to be a great company in difficult times in previous recessions.
“CardWorks is in an exceptionally strong financial position and our long-term strategic priorities remain intact,” added Berman. “Each of our businesses continues to do very well in these challenging and uncertain times. We have focused on the well-being of our employees and communities throughout our 32-year history, including through these difficult events of 2020.
“As a private company, we look forward to further expanding our unique business and implementing our long-term strategic initiatives while delighting our customers and customers,” he continued.
The situation at Ally and CardWorks developed similarly to the situation announced in May at one of the largest investors in the area of buy-here-pay-here retailers.
On May 26, Texas Capital Bancshares, the parent company of Texas Capital Bank, announced that Texas Capital Bancshares and the Independent Bank Group, the holding company of the Independent Bank, mutually agreed to terminate their merger agreement.