By: CNBC.com with wires
General Motors said it will acquire auto financing company AmeriCredit so it can increase leasing and make more loans to buyers with low credit scores.
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The Detroit automaker said it will pay $3.5 billion to buy all of AmeriCredit's [ACF 24.01 
0.10 (+0.42%) 
] stock at $24.50 per share — a 24 percent premium over Wednesday's close.
It expects the deal to close in the fourth quarter.
GM CEO Ed Whitacre said Wednesday — the deal will make GM more competitive in auto financing. GM executives have said their sales have been hurt by a lack of subprime and lease financing.
"It's good for customers, it's good for dealers and good for us. It's good for our customers because it gives them more choice, more competition," Chris Liddell, the company's chief financial officer, told CNBC Thursday. "It's good for dealers for the same reason."
Subprime auto financing represents between 10 percent and 25 percent of auto loans depending on the market in the United States, according to dealers.
That form of financing for less credit-worthy borrowers is especially important for brands such as Chevrolet—GM's mass-market brand and one of four that it has kept in the United States as part of its restructuring.
The acquisition is raising eyebrows on Capitol Hill, however, with some senators mindful of the fact that GM received a major government bailout last year.
Senator Chuck Grassley late on Thursday asked the Special Inspector General for TARP to investigate GM's purchase of the auto loan company and the Treasury Department's involvement in the acquisition.
Also late Thursday, credit-rating agency Moody's announced that it placed the ratings of Americredit under review for a possible upgrade.
Step Toward IPO
The acquisition is also another step in the company's move to file for an IPO, Liddell said.
"It's useful, it's another helpful building block is the way that I'd put it, and we've been putting in place all the necessary building blocks during the course of this year for the IPO and this is another useful step in that direction," said Liddell.
Despite the company's optimism that the subprime lender will help spur GM's business, there remains the lingering question as to whether or not a company that cost $50 billion to save and is still 61-percent owned by the American government should go into the subprime business.
Liddell, however, said owning the subprime lender will help the company repay its debt to the American government.
"Not everything associated with non-prime is necessarily bad. We think these are important people who are responsible with the way they deal with their loans and there's an opportunity to market to them," said Liddell. "In terms of the IPO and getting the government back its investment, if anything we think this enhances it because it actually allows us to sell more vehicles in a responsible way and a profitable way."
Mike Jackson, chairman and CEO of AutoNation [AN 23.14 0.60 (+2.66%) ], who reported earnings Thursday, told CNBC he too sees the purchase of the finance arm as a positive move towards repaying the government.
"As far as this deal, I'm all smiles, it's a plus on every level for us and for General Motors and for the shareholders of General Motors that eventually have to be paid back, namely the U.S. government," said Jackson.
GM said that Ally Financial—formerly known as GMAC—will continue to finance GM's dealer inventory and make loans to buyers with good credit.
GM said it is not considering a purchase of Ally's auto financing unit.
GM said that AmeriCredit, which has assets of about $10 billion, would become the "core" of a new captive finance arm.
The automaker said it did not expect the deal would hurt its balance sheet and had not altered its goal of returning to an investment-grade credit rating.
GM said the management team of Fort Worth, Texas-based AmeriCredit would remain in place after the acquisition. AmeriCredit already has financing agreements in place with about 4,000 GM dealers.
The Associated Press and Reuters contributed to this report.
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