General Motors 2013 Annual Report Download - page 71

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GENERAL MOTORS COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
Note 3. Acquisition of Businesses
Acquisition of Certain Ally Financial International Operations
In November 2012 GM Financial entered into a definitive agreement with Ally Financial to acquire 100% of the outstanding equity
interests in the top level holding companies of its automotive finance and financial services operations in Europe and Latin America
and a separate agreement to acquire Ally Financial’s non-controlling equity interest in GMAC-SAIC Automotive Finance Company
Limited (GMAC-SAIC), which conducts automotive finance and other financial services in China.
On April 1, 2013 GM Financial completed the acquisition of Ally Financial’s European and Latin American automotive finance
operations except for France, Portugal and Brazil; on June 1, 2013 it completed the acquisition of Ally Financial’s automotive finance
operations in France and Portugal; and on October 1, 2013 it completed the acquisition of Ally Financial’s automotive finance
operations in Brazil. The aggregate consideration for these acquisitions was $3.3 billion, subject to certain closing adjustments.
Acquisition-related costs were insignificant. In addition GM Financial repaid loans of $1.4 billion that were assumed as part of the
acquisitions. GM Financial recorded the fair value of the assets acquired and liabilities assumed on the acquisition dates. Certain
amounts previously presented related to the acquisitions have been, and will continue to be, updated as a result of closing adjustments.
GM Financial’s acquisition of Ally Financial’s equity interest in GMAC-SAIC is subject to certain regulatory and other approvals
and is expected to close in 2014. GM Financial expects to pay approximately $900 million to close this acquisition subject to certain
closing adjustments.
The following table summarizes the aggregate consideration and the assets acquired and liabilities assumed at the acquisition dates
before eliminations for net intercompany receivables of approximately $300 million (dollars in millions):
Cash ............................................................................................ $ 607
Restricted cash .................................................................................... 906
Finance receivables ................................................................................ 15,144
Other assets, including identifiable intangible assets ....................................................... 769
Secured and unsecured debt .......................................................................... (12,833)
Other liabilities .................................................................................... (1,483)
Identifiable net assets acquired ........................................................................ 3,110
Goodwill resulting from the acquisitions ................................................................ 144
Aggregate consideration ............................................................................. $ 3,254
The fair value of finance receivables was determined using a discounted cash flow approach. The contractual cash flows were
adjusted for estimated prepayments, defaults, recoveries and servicing costs and discounted using a discount rate commensurate with
risks and maturity inherent in the finance contracts. The contractually required payments receivable, cash flows expected to be
collected and fair value for finance receivables acquired with deteriorated credit quality at the acquisition date were $799 million,
$728 million and $601 million. The contractually required payments receivable, cash flows not expected to be collected and fair value
for other acquired finance receivables were $15.6 billion, $303 million and $14.5 billion. The fair value of secured and unsecured debt
was determined using quoted market prices when available and a discounted cash flow approach when not available.
We recorded goodwill in the amount of $144 million for the excess of the aggregate consideration over the fair value of the
individual assets acquired and liabilities assumed and such amount is primarily attributed to the value of the incremental GM
Financial business expected. The recorded goodwill is subject to further adjustment resulting from the finalization of closing balance
sheet audits. Valuations and assumptions pertaining to income taxes are subject to change as additional information is obtained during
the measurement period. All of the goodwill was assigned to the GM Financial segment and will be assigned to reporting units, which
will be determined pending completion of the remaining acquisitions. The goodwill is not tax deductible.
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