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Stock Analyst Update

Citigroup's Acquisition of Associates Boosts Growth Outlook

Drop in financial giant's share price represents a buying opportunity.


The stock market isn't wild about Citigroup's (C) proposed acquisition of Associates First Capital (AFS), but Wednesday's deal gives Citi new opportunities for growth in its specialty-finance businesses. Investors should consider buying this financial-services industry leader while its share price is down.

Citigroup's $31.1 billion stock deal for Associates will boost Citi's positions in its credit-card, consumer-finance, and corporate-finance businesses in the United States and abroad, and it should add to earnings immediately--about $0.10 per share in the first year after the companies are combined. Citigroup will gain access to 27 million new customers, pick up 2,600 consumer-finance branches, and extend its reach in 15 countries.

Laura Pavlenko Lutton does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.