Citigroup Inc.’s OneMain Financial unit won U.S. approval for its sale to Springleaf Holdings Inc., which agreed to sell branches to resolve antitrust concerns.
Springleaf, the lender that counts Fortress Investment Group as its largest investor, agreed to sell 127 branches in 11 states to Lendmark Financial Services to preserve competition for personal installment loans, according to court filings in Washington Friday.
“Personal installment loans are often a critical lifeline for borrowers with limited credit options,” said Assistant Attorney General Bill Baer, who heads the Justice Department’s antitrust division. “Today’s proposed settlement will ensure that subprime borrowers in over 100 local markets across the United States continue to enjoy the benefits of competition.”
Springleaf, based in Evansville, Indiana, jumped 11.9 percent to $49.49 at 12:11 p.m. in New York. The stock had climbed 22 percent this year through Thursday.
The sale of OneMain hit a snag earlier this year when the Justice Department and some state attorneys general expressed concerns about the deal, Springleaf said in August.
Joining the U.S. in the suit were the states of Texas, Pennsylvania, Colorado, Virginia, West Virginia, Washington and Idaho.
The Justice Department said that without the sale of branches, borrowers would see a reduction of choice that might drive them to more expensive forms of credit or leave them no alternative. Personal installment loans typically total several thousand dollars and are provided to borrowers who don’t have access to cheaper forms of credit.
The locations represent 6 percent of the lender’s branches, Springleaf said in a statement. The combined company will have about 1,850 branches in 43 states after the Lendmark deal, according to the statement.
Springleaf said it expects to close the sale to Lendmark, which is based in Covington, Georgia, in April.
Mark Costiglio, a Citigroup spokesman, declined to comment on the agreement.
The case is U.S. v. Springleaf Holdings Inc., 15-cv-1992, U.S. District Court, District of Columbia (Washington).