The Deal: Capital One Financial Corporation has agreed to acquire Onyx Acceptance Corporation for $191 million in cash, or $28 per share. The boards of both companies have approved the transaction. The deal remains subject to shareholder and regulatory approvals. The sale is expected to close early in the first quarter of 2005.

Discussion: Onyx Acceptance purchases, securitizes, and services loans originated by auto dealerships. The company primarily acquires loans secured by late-model vehicles and made by car buyers with good credit. The company does not originate loans directly to consumers. Onyx Acceptance makes its money from loan interest, contract sales, and servicing fees.

Capital One Financial is a major credit card issuer. The company uses consumer information to match potential customers to the right credit card plan. The company issues platinum and gold cards to preferred customers as well as secured and unsecured cards for customers with poor or limited credit histories. Capital One has nearly 50 million customer accounts. The company also provides mortgage services, auto financing, credit insurance, and other consumer lending products.

Capital One intends to combine Onyx Acceptance with its Auto Financing business. The deal is expected to expand the range of Capital One's auto dealer relationships and to enhance to companies product lines.

Copyright NVST, Inc. Oct 4, 2004
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