GM to buy AmeriCredit for $3.5 billion

DETROIT (Reuters) - General Motors Co said on Thursday it would acquire auto finance company AmeriCredit Corp for $3.5 billion in a deal aimed at easing financing terms for subprime car shoppers.

The deal, which remains subject to approval by AmeriCredit's shareholders, would give GM a captive finance arm for the first time since it sold off a controlling stake in GMAC in 2006.

GM dealers have complained that tighter financing terms have cost them sales in a U.S. auto market that has failed to deliver the strong recovery many had anticipated in 2010.

GM, which was restructured by the U.S. government in bankruptcy, is preparing for an initial public offering later this year, people familiar with those discussions have said.

Addressing its lack of a captive finance company removes an uncertainty for GM as it prepares for a stock offering intended to reduce the U.S. government's nearly 61 percent ownership stake.

Under terms of the deal, GM would pay AmeriCredit stockholders $24.50 per share. The stock closed at $19.70 on Wednesday.

AmeriCredit's shares spiked 22 percent to $24.09 in premarket trading on Thursday.

GM said that AmeriCredit, which has assets of about $10 billion, would become the "core" of a new captive finance arm. The automaker said it did not expect the deal would hurt its balance sheet and had not altered its goal of returning to an investment-grade credit rating.

GM said the management team of Fort Worth, Texas-based AmeriCredit would remain in place after the acquisition. AmeriCredit already has financing agreements in place with about 4,000 GM dealers.

GM Chief Executive Officer Ed Whitacre said the AmeriCredit deal would benefit the top U.S. automaker's competitiveness by "expanding the financing options we can offer to consumers."

Subprime auto financing represents between 10 percent and 25 percent of auto loans depending on the market in the United States, according to dealers.

That form of financing for less credit-worthy borrowers is especially important for brands such as Chevrolet -- GM's mass-market brand and one of four that it has kept in the United States as part of its restructuring.

(Reporting by Kevin Krolicki, editing by Gerald E. McCormick and Maureen Bavdek)