Acquisition of Businesses (Notes)

6 Months Ended

Jun. 30, 2013

Acquisition of Businesses [Abstract]

Business Combination Disclosure [Text Block]

Acquisition of Ally Financial Inc. International Operations

In November 2012, we 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 its non-controlling equity interest in GMAC-SAIC, which conducts automotive finance and financial services in China.

On April 1, 2013, we completed the acquisition of substantially all of Ally Financial's European and Latin American automotive finance operations except for France, Portugal and Brazil; and on June 1, 2013 completed the acquisition of Ally Financial's automotive finance operations in France and Portugal. The aggregate consideration for these acquisitions was $2.6 billion, subject to certain closing adjustments, of which $65 million is contingent upon closing the acquisition of the Brazilian automotive finance and financial services operations described below. In addition, we repaid loans of $1.4 billion that were assumed as part of the acquisition. We recorded the fair value of the assets acquired and liabilities assumed on the acquisition dates.

Our acquisition of Ally Financial's Brazilian automotive finance operations and the equity interest in GMAC-SAIC are subject to certain regulatory and other approvals, and are expected to close in 2013, early 2014 or as soon as practicable thereafter. We expect to pay approximately $1.5 billion to close these acquisitions, subject to certain closing adjustments.

The international operations were formerly a part of General Motors Acceptance Corporation, the former captive finance subsidiary of GM, and due to this longstanding relationship, the majority of the international operations business is related to GM and its dealer network. With the acquisition of the international operations, we have expanded to become a global captive finance company, and expect to realize numerous strategic benefits, including increased finance penetration resulting from a broadened relationship with GM, geographic diversification of our customer base and transition of our business into a full-spectrum credit platform.

The acquisition of the international operations has been accounted for under acquisition accounting, whereby the purchase price of the transaction was allocated to the identifiable assets and liabilities assumed based upon their fair values. The estimates of the fair values recorded were determined based on fair value measurement principles (see Note 9 - "Fair Values of Assets and Liabilities" for additional information) and reflect significant assumptions and judgments. Material valuation inputs for finance receivables included adjustments to monthly principal and interest cash flows for prepayments and credit loss expectations; servicing expenses; and discount rates developed based on the relative risk of the cash flows which considered loan type, market rates as of our valuation date, credit loss expectations and capital structure. Material valuation inputs for debt included discount rates developed based on the relative risk of the contractual cash flows, taking into consideration market rates and liquidity expectations for each country. Certain assumptions and judgments that were considered to be appropriate at the applicable acquisition date may prove to be incorrect if market conditions change.

The excess of the purchase price over the estimated fair values of the net assets acquired was recorded as goodwill, which is primarily attributed to the value of the incremental GM business expected. The preliminary goodwill amount is $50 million, but is subject to further adjustment pending the closing of our acquisition of the remaining international operations as well as any potential adjustments 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. We will assign the goodwill to reporting units, which will be determined pending completion of the remaining acquisitions. The goodwill will not be deductible for tax purposes.

The following table summarizes the aggregate consideration and the assets acquired and liabilities assumed at the acquisition dates (in millions):

	Acquired International Operations
Cash	$	440
Restricted cash	525
Finance receivables	10,981
Other assets, including identifiable intangible assets	254
Secured and unsecured debt	(8,910		)
Other liabilities	(722		)
Identifiable net assets acquired	2,568
Goodwill resulting from the acquisition	50
Aggregate consideration	$	2,618

The following table provides information related to finance receivables acquired which had no deterioration in credit quality as of the applicable acquisition dates (in millions):

	Consumer		Commercial
Contractually required payments receivable:	$	6,026	$	4,067
Cash flows not expected to be collected:	98		18
Fair value:	5,422		3,990

The results of operations of the international operations are included in our results beginning April 1, 2013, except for the results of the operations in Portugal and France, which are included in our results beginning June 1, 2013. The following table summarizes the actual amounts of revenue and earnings of the international operations included in our consolidated financial statements for the three and six months ended June 30, 2013 and the supplemental pro forma revenue and earnings of the combined entity for the three and six months ended June 30, 2013 and 2012, as if the acquisitions had occurred on January 1, 2012 (in millions).

	International Operations Amounts Included in Results for Three and Six Months Ended		Supplemental Pro Forma - Combined
			Three Months Ended				Six Months Ended
	June 30, 2013		June 30, 2013		June 30, 2012		June 30, 2013		June 30, 2012
Total revenue	$	248	$	854	$	746	$	1,634	$	1,456
Net income	54		184		223		324		374