Bank of America has agreed to sell its stake in online auto-loan firm CarFinance.com to Internet mortgage broker Eloan Inc. in a deal that signals broad cooperation between the banking giant and the residential lender.
Eloan said yesterday it will swap about 2.9 million shares of its stock in exchange for CarFinance.com, which is 80% owned by Bank of America and 20% by individuals, including its founder and president Robert Ferber. The deal is valued at about $83 million following a nearly 25% surge in Eloan stock Tuesday from $25 to more than $29 in midday trading.
After the deal closes later this year, Bank of America will own about 4% of Eloan, and its president, Kenneth Lewis, will join Eloan's board of directors. Ferber will continue to operate CarFinance.com as a division of Eloan.
The agreement, which combines the country's largest bank and a leading online mortgage provider, gives Bank of America a stake in the online mortgage business while allowing Eloan to extend its financial services into a second line of lending.
Bank of America already funds loans originated by Eloan, but the companies say they expect that business to expand as they cooperate to distribute various financial products through Eloan's Internet channels.