CIT Group (CIT) Wraps Up Direct Capital Acquisition Deal - Analyst Blog


CIT Group Inc. ( CIT ) announced that it has successfully completed the acquisition of Portsmouth, NH-based Direct Capital Corporation. The company executed this acquisition through its subsidiary CIT Bank.

With the closure of this strategic deal, CIT Group looks ahead to the development of its small business as well as mid-sized market lending and leasing potential. Also, the company believes that this collaboration will give it a competitive edge in the market and boost returns.

Acquisition Details

Earlier in June, CIT Group revealed its plan to acquire Direct Capital though the terms and conditions of the transaction were not divulged. As per the deal, Christopher J. Broom, Co-founder and Chairman of Direct Capital and James P. Broom, Chief Executive Officer of Direct Capital were to continue to head the business.

Direct Capital, with assets worth $500 million, has served as a lender for over 80,000 customers offering about $2.25 billion for their business requirements. Hence, the agreement is expected to enhance CIT Group's existing portfolio as well as increase its current client base.

The acquisition is also expected to benefit customers of Direct Capital providing them access to CIT Group's enhanced services and wide range of products.

CIT Group's Other Endeavors

Along with the second-quarter 2014 earnings release in July, CIT Group announced a definitive agreement to merge with IMB Holdco LLC, the parent company of OneWest Bank N.A. The cash/stock deal is valued at $3.4 billion and requires regulatory approvals and is subject to customary closing conditions.

Also, earlier this year, CIT Group acquired Nacco SAS - a premier full-service wagon leasing company headquartered in Paris.

Our Take

CIT Group has been consistently trying to regain its foothold in the market. The company's efforts are well reflected in its better-than-expected second-quarter results and its continuous involvement in diversification activities. In fact, the turnaround in investors' sentiments following the results also signals that the company's efforts are paying off.

However, dawdling growth in the industries where CIT Group provides finance, rigorous regulations and feeble economic recovery could hamper the company's development going forward.

Currently, CIT Group carries a Zacks Rank #3 (Hold). Some better-ranked miscellaneous services companies include FleetCor Technologies, Inc. ( FLT ), Euronet Worldwide Inc. ( EEFT ) and Ladder Capital Corp ( LADR ). All these stocks hold a Zacks Rank #2 (Buy).

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.

This article appears in: Investing , Business , Stocks

Referenced Stocks: CIT , LADR , FLT , EEFT

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