Springleaf to move HQ out of state after $4B acquisition

Springleaf Holdings Inc.,a consumer lender that went public in 2013, plans to move its headquarters out of Indiana after buying Citigroup Inc.’s subprime lender OneMain Financial for $4.25 billion in cash.

Springleaf, majority owned by Fortress Investment Group LLC, plans to complete the transaction during the third quarter, according to statements from both companies issued Tuesday. Springleaf expects the deal to boost its 2015 net income when one-time charges related to the purchase are excluded. Citigroup said the sale will add about $1 billion to pre-tax earnings.

Springleaf and OneMain are two of the biggest U.S. providers of installment loans, a type of high-interest credit paid back in chunks over time. OneMain, of Baltimore, has more than 1,100 branches, while Evansville-based Springleaf has close to 830, according to their websites.

Springleaf will consolidate approximately 200 branches beginning in the middle of next year. The combined company is expected to have 1,967 branches across 43 states. The Springleaf brand will begin to be phased out in 2016 and use the name OneMain.

Once the transaction is complete, the combined company will be run from Springleaf's executive office in Connecticut. It will maintain a significant presence in Evansville and Baltimore and run key operations out of Wilmington, Delaware; Chicago; London, Kentucky; Mendota Heights, Minnesota; Tempe, Arizona; Fort Mill, South Carolina; and Irving and Fort Worth, Texas.

“While this business didn’t fit our strategy, it serves customers who deserve and need credit,” Citigroup CEO Michael Corbat said in the statement. “Today’s announcement is a significant milestone in the simplification of our company and we continue to focus on delivering the potential of our franchise for our clients and shareholders.”

Springleaf CEO Jay Levine will lead the combined company.

A deal would help end at least six years of uncertainty for OneMain, which was tagged for sale in 2009 by Citigroup’s then-CEO, Vikram Pandit, after the parent company took the largest U.S. bank bailout. Pandit rebranded the unit in December 2010 and started an auction process in 2011 that later broke off without a deal. Citigroup said in May 2014 that it was once again pursuing exit options.

Citigroup had been seeking at least $4 billion for OneMain, people familiar with the matter have said, and also had filed to hold an initial public offering for the unit, pursuing what’s called a dual-track process to get the best price.

OneMain had $3.34 billion in shareholder’s equity and $9.72 billion in assets at the end of September, according to a filing issued as part of its proposed IPO. The firm generated $415 million in profit on $1.67 billion in revenue in the first nine months of 2014. Springleaf earned about $552 million during the same period, it reported in November.

Citigroup is acting as its own adviser on the deal. Bank of America Corp., Barclays Plc, Credit Suisse Group AG and Goldman Sachs Group Inc. advised Springleaf.