Antitrust Law Daily Wrap Up, ACQUISITIONS & MERGERS—D.D.C: U.S. consent decree allowing combination of consumer lenders approved, (Apr 21, 2016)

By Jeffrey May, J.D.

The federal district court in Washington, D.C. has approved a consent decree, resolving federal and state competition concerns over Citigroup, Inc.'s sale of OneMain Financial Holdings, LLC to Springleaf Holdings, Inc. Under the terms of the consent decree, Springleaf is required to divest 127 of its 830 branches to settle the allegations of the U.S. Department of Justice and seven state attorneys general that the transaction, which would combine the two largest providers of personal installment loans to subprime borrowers in the United States, violated Sec. 7 of the Clayton Act (U.S. v. Springleaf Holdings, Inc., April 15, 2016, Collyer, R.).

Springleaf announced that it closed its acquisition of OneMain for approximately $4.49 billion in cash on November 16, shortly after the complaint and proposed settlement were announced. According to a complaint, elimination of the competition between Springleaf and OneMain would have left subprime borrowers seeking personal installment loans with few choices in parts of 11 states. In addition to the Justice Department, the States of Colorado, Idaho, Pennsylvania, Texas, Virginia, Washington, and West Virginia joined the complaint, as parens patriae.

OneMain is the largest provider of personal installment loans to subprime borrowers in the United States, with 1,139 branch locations in 43 states. OneMain has a consumer loan portfolio that totals $8.4 billion. Springleaf is the second-largest provider of personal installment loans to subprime borrowers in the United States, with approximately 830 branches in 27 states. It has a consumer loan portfolio that totals $4.0 billion. OneMain is a subsidiary of CitiFinancial Credit Company, which is a wholly owned subsidiary of Citigroup, Inc. Personal installment loans are marketed to consumers who have limited access to credit from traditional banking institutions. The government contended that Springleaf and OneMain specialize in large installment loans typically ranging from $3,000 to $6,000.

Extension of time for divestiture. The government has twice extended the time for divestiture of the relevant assets, under the consent decree. Pursuant to the latest extension, the divestiture period will not expire before May 13, 2016.

The case is Case No. 1:15-cv-01992.

Attorneys: Angela Ting for U.S. Department of Justice. Clifford H. Aronson (Skadden, Arps, Slate, Meagher & Flom LLP) for Springleaf Holdings, Inc. Ronan P. Harty (Davis Polk & Wardwell LLP) for OneMain Financial Holdings, LLC, CitiFinancial Credit Co., and Citigroup, Inc.

Companies: Springleaf Holdings, Inc.; OneMain Financial Holdings, LLC; CitiFinancial Credit Co.; Citigroup, Inc.

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