Synchrony to buy Ally Financial’s consumer financing business

Synchrony announced it’s buying Ally Financial’s point-of-sale financing business, Ally Lending, which offers home improvement loans and has a $2.2 billion book of business. 

The big picture: As prices rise — especially across the HVAC industry — the role of financing becomes more important.

• One estimate says point-of-sale consumer financing makes up 3.5% of all US consumer spending. 

Details: The deal adds ~2,500 merchants (HVAC contractors included) and 450,000 borrowers to Synchrony’s customer base. “This expands Synchrony's multi-product strategy by extending its revolving credit and promotional financing products to Ally Lending's merchants,” the announcement said.  

• "This deal represents a significant and exciting growth opportunity for Synchrony — it's a strong strategic fit that will unlock value… by integrating products and teams in our expanding platforms of home improvement and health and wellness," said Synchrony CEO Brian Doubles. 

Of note: This isn’t the first time home improvement lenders have been targeted in M&A deals. In 2021, Truist Bank acquired Service Finance for $2 billion, Goldman Sachs bought Greensky for a similar amount, and Regions Bank acquired EnerBank for ~$1 billion. 

• This past October, however, Goldman announced it was offloading Greensky for a rumored fraction of what it paid.

What’s next: Synchrony will provide more information on the deal today during its earnings call.