Automaker Buys Savings and Loan Company For $493 Million
DETROIT (AP) _ Ford Motor Co. said Thursday it will buy First Nationwide Financial Corp., holding company for the nation’s ninth-largest savings and loan association, for $493 million.
Also Thursday, Chrysler Financial Corp. said it had completed its purchase of E.F. Hutton Credit Corp. for $125 million.
Ford will pay $32 per share under an agreement reached with National Intergroup Inc. for 81.4 percent of San Francisco-based Nationwide Financial, under the tentative agreement, Ford Chairman Donald E. Petersen and President Harold A. Poling said in a joint statement.
″This acquisition is part of Ford’s plan of adding to our present strengths by developing new sources of earnings,″ the company officials said. ″Acquiring First Nationwide, a major savings and loan operation, fits into our long-range plans of expanding into complementary industries that have a record of, and prospects for, substantial growth.″
In Pittsburgh, home of National Intergroup, Chairman Howard M. Love said in a statement: ″On behalf of the board of directors, I personnally regret having to make this decision, but there is far more synergy for First Nationwide as a partner of Ford than there ever could be with NII.″
First Nationwide was the major contributor to NII’s 1985 first half earnings, but it has not been a source of cash to the parent because its earnings have been retained in order to increase its assets.
NII paid $241 million for First Nationwide in 1980. Under NII, the savings and loan increased its assets from $2.7 billion in 1980 to $10.7 billion on June 30, 1985.
The transaction requires approval by the Federal Home Loan Bank Board and other regulatory agencies, Ford said.
First Nationwide operates 180 First Nationwide Savings branch offices in California, Florida, New York and Hawaii.
It also operates TranSouth Financial Corp., a consumer finance company headquartered in Charleston, S.C., and First Nationwide Network, based in San Francisco, which provides services to savings institutions in 20 states.
National Intergroup is headquartered in Pittburgh.
The acquistion marks Ford’s first move into the financial services field beyond automotive financing.
Chrysler Corp. in June reached a tentative agreement through a subsidiary to buy E.F. Hutton Credit Corp., a diversified equipment finance company engaged in commercial lending and leasing through 28 U.S. offices.
E.F. Hutton Credit, headquartered in Greenwich, Conn., had gross finance receivables and operating leases of $1 billion as of March 31, Chrysler Corp. said.
Chrysler said it would rename the company Chrysler Financial Corp.
″CFC is going to make greater financial contributions to Chrysler Corp., and that in turn will make us stronger and more competitive in our basic business - the sale of automobiles,″ said Gerald Greenwald, Chrysler vice chairman.
The nation’s largest automaker, General Motors Corp., earlier this year expanded into mortgage services financing through its subsidiary, General Motors Acceptance Corp.
Scott Merlis, automotive analyst with Shearson Lehman-American Express, a New York brokerage house, said Ford’s purchase ″would have a minor positive impact on Ford earnings, and more importantly it just allows Ford to enter a new field in the financial service area.″
He said Ford had $5.4 billion in cash at the end of the second quarter, ″so it is far from a drain.″
″The financial services business generally provides the automakers with a decent earnings stream. It’s a small hedge against downturns,″ he said.
Ford said it intends to operate First Nationwide as an independent business, with Anthony M. Frank continuing as chairman and chief executive officer.