GM to Buy Ally Overseas Auto Loan Business

General Motors Co. confirms that it will buy Ally Financial Inc.'s auto finance units in Europe and Latin America for $4.2 billion.

The purchase price also includes Ally's 40% ownership in a Chinese auto loan joint venture with Shanghai Automotive Industry Corp. Group. Ally (formerly GMAC Inc.) had not previously disclosed plans to sell that stake.

Ally and GM say they expect the deal, which is subject to regulatory approvals, to close in stages next year. The acquired businesses will become part of the carmaker's GM Financial unit. They are expected to add $300 million to $400 million to the subsidiary's annual pretax earnings.

The automaker aims to boost its overseas sales by broadening its captive lending business, which finances dealer inventories and makes low-interest loans to buyers of GM vehicles. The Ally purchase covers units in 14 countries, including Brazil, Chile, France, Germany, Italy and the U.K.

After the deal, the finance arm will operate in markets that account for 80% of GM's global sales.

Ally has said it will use the proceeds of the sale to GM plus the funds from selling its Canadian and Mexican units to other buyers to help repay the remaining balance on its $17.2 billion bailout financing from the U.S. government.