Newspaper article THE JOURNAL RECORD

Citigroup's $30 Billion Deal Puts Associates First Capital in Spotlight

Newspaper article THE JOURNAL RECORD

Citigroup's $30 Billion Deal Puts Associates First Capital in Spotlight

Article excerpt

NEW YORK -- Millions of Americans own credit cards issued by such well-known companies as Texaco, Radio Shack and Office Depot.

It's a safe bet, however, that few of those card holders were familiar with Associates First Capital, the giant lending company operating comfortably in the background of those household names.

Until this past week, that is, when financial services conglomerate Citigroup agreed to pay a huge $30 billion to acquire the Irving, Texas-based consumer and commercial finance company.

The deal was the fourth largest U.S. acquisition this year, and the first not to involve big name technology companies, according to CommScan, a New York financial data company.

Nonetheless, Citigroup was willing to pay such a hefty price tag because, despite operating in relative anonymity, Associates First Capital is the largest publicly traded finance company in the United States and the fifth largest consumer finance company in Japan.

Formed in 1918 to help finance Ford Model T's, Associates First is a market leader in each of its numerous business lines, including issuing credit cards, providing home equity and mortgage loans, and leasing trucks and heavy equipment.

A typical consumer might interact with Associates First in a variety of ways.

Rural Iowans, for example, might head to the local Tractor Supply outlet in search of an expensive piece of farm equipment. A financing deal would likely be arranged so the farmer could pay off Tractor Supply over time. The farmer might also be issued a Tractor Supply credit card for future purchases.

The financial details of both the long-term finance agreement and future credit card transactions would be handled by Associates First Capital.

"The customer probably has no idea that Associates First is involved," said Joe Bruyer, who manages a Tractor Supply store in Council Bluffs, Iowa.

The same is probably true of the Texaco, Radio Shack or Home Depot card holder.

In fact, 80 percent of Associates First's credit card business is done through partnerships with retailers that deal directly with consumers, said company spokesman David Sandor.

"The Associates brand is not necessarily front and center. …

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