On Tuesday, major investment bank Goldman Sachs Group Inc. (GS, Financial) and fintech company GreenSky Inc. (GSKY, Financial) announced a definitive merger agreement in which the New York-based investment bank plans to acquire GreenSky in an all-stock transaction valued at approximately $2.24 billion.
Per the agreement terms, GreenSky shareholders will receive 0.03 shares of Goldman Sachs common stock for each share of GreenSky. The board of directors of both companies approved the transaction, which is set to close between the fourth quarter of 2021 and the first quarter of 2022 subject to customary closing conditions, GreenSky shareholder approval and the receipt of required regulatory approvals.
Transaction aims to improve consumer banking experience for customers
Goldman Sachs Chairman and CEO David Solomon said that the acquisition of GreenSky bolsters Goldman’s aspiration to make its Marcus platform “become the consumer banking platform of the future.” The Atlanta-based fintech company “powers commerce at the point of scale” through its platform that allows merchants and banks to offer frictionless payment options to consumers.
GreenSky CEO David Zalik added that the fintech company’s mission is to assist strong value-helping businesses grow and delight customers.
Target company background
Through its network of more than 10,000 merchants, GreenSky provides simple and transparent home improvement financing solutions to more than 4 million customers. The company said on Aug. 5 that second-quarter transaction volume totaled $1.5 billion, up from the prior-year quarter transaction volume of $1.4 billion. Revenue of $136.5 million increased 3% from the second-quarter 2020 revenue of $133 million.
GuruFocus ranks the company’s profitability 7 out of 10 on several positive investing signs, which include an operating margin that outperforms more than 89% of global competitors and a three-year revenue growth rate that outperforms over 80% of global software companies.
Shares of GreenSky opened at $11.81, up 52% from the previous close of $7.77. The stock is significantly overvalued based on Wednesday’s price-to-GF Value ratio of 1.46.