Ally Financial in Detroit has received a demand from an activist investor to explore strategic alternatives, including a possible sale of the company. The activist is also seeking two board seats.
The $156 billion-asset company said it received a letter on Dec. 23 from Lion Point Capital that urged Ally's board to create a strategic alternatives committee. Ally's board met shortly afterward to discuss the demands, and it later told Lion Point that it would not form such a committee.
On Monday Lion Point sent a notice to Ally that it intends to nominate two directors for Ally's board. The election is scheduled for May 3, during Ally's annual meeting.
"Our fundamental disagreement is with Lion Point's clear agenda to force a sale of Ally," Franklin Hobbs, the chairman of Ally, said in a news release. "Such a course of action would be contrary to the best interests of stockholders, and our obligations to all stockholders do not permit us to adopt such a course to avoid a proxy contest."
Lion Point owns less than 1% of Ally's common stock, according to the release.
Lion Point, of New York, could not immediately be reached for comment.
Ally had a rocky 2015 and the performance of its stock, which closed Tuesday at $18.62, or nearly 22% off its 52-week peak, reflected it. The company announced nearly a year ago that it had lost a big book of business — subsidized leases for General Motors cars — and it changed chief executives shortly afterward. That said, Ally passed Wells Fargo as the No. 1 U.S. auto lender during the year, and its third-quarter earnings per share met expectations as it bolstered deposits and managed to increase revenue in the face of growth concerns. Its stock almost recovered from the damage early in the year, but its shares sank in the second half.
The company is expected to roll out more loan products this quarter as it seeks to increase its cross-selling to its loyal depositor base. Also, Ally's receipt of regulatory approval in November to redeem about $1.3 billion of preferred stock could lead to a buyback this year.