What reportedly was in the works about a week ago came to fruition today as Citigroup announced that it has reached a definitive agreement to sell OneMain Financial Holdings to Springleaf Holdings for a purchase price of $4.25 billion in an all-cash transaction.

The boards of directors of both Springleaf and Citigroup approved the deal that is expected to close during the third quarter of this year, subject to regulatory approvals and other customary closing conditions.

On a pro forma basis, as of Sept. 30, the combined subprime finance company would have had $13.96 billion in core consumer net finance receivables. At closing, the combined company is expected to have 1,967 branches across 43 states.

Previous reports noted Citigroup was weighing whether to sell OneMain Financial or generate an initial public offering.

According to OneMain Financial’s IPO prospectus filed on Feb. 11 with the Securities and Exchange Commission, about 20 percent of $8.3 billion portfolio as of Sept. 30 was secured with a vehicle. The company has 1.3 million customer accounts connected to a base the company described as “geographically diverse” with an average FICO score of 629.

OneMain Financial has been reported as part of Citi Holdings, which was established in 2009 and consists of businesses and portfolios of assets that Citi has determined are not central to its core franchise.

With roots dating back to 1912, OneMain is a nationwide provider of personal loan solutions, including one-on-one, local service through a network of more than 1,100 neighborhood branches across 43 states. Founded originally as Commercial Credit, the company has a long history in the personal finance business and over the years has acquired companies such as The Associates and Washington Mutual Finance.

Headquartered in Baltimore, OneMain has approximately 5,600 employees.

“OneMain is a great business with talented people, who will now become part of a leading personal finance company,” Citi chief executive officer Michael Corbat said. “While this business didn't fit our strategy, it serves customers who deserve and need credit.

“Today’s announcement is a significant milestone in the simplification of our company, and we continue to focus on delivering the potential of our franchise for our clients and shareholders,” Corbat continued.

Citi went on to mention it will use a portion of the proceeds from this sale to retire certain funding that currently supports Citi Holdings. The sale, along with retirement of the related funding, are expected to result in a net addition to earnings before income taxes of approximately $1 billion.

Since its creation, Citi has sold more than 60 businesses and reduced assets in Citi Holdings by more than $700 billion. As of Dec. 31, Citi Holdings' assets represented approximately 5 percent of total Citi assets, down from a peak of more than 30 percent.

Springleaf is a consumer finance company that provides loan products to customers through its nationwide branch network and through its Internet lending division. The company has been in business for nearly 100 years originating, underwriting and servicing personal loans primarily to nonprime consumers. The company operates one of the largest consumer finance branch networks in the United States, serving its customers through nearly 830 branches in 26 states.

Now with this acquisition in motion, Springleaf president and chief executive officer Jay Levine said, “This is a transformational transaction, bringing together two best-in-class personal finance businesses to create a combined company that we believe is financially strong and optimized for growth. With complementary branch networks, a leading digital presence, and an ongoing commitment to responsible lending practices, we are positioned to serve a significant portion of Americans.

“Importantly, OneMain shares our strong commitment to excellence in customer service, and both Springleaf and OneMain are committed to making a meaningful, positive difference to the families in the communities we serve,” Levine added We look forward to welcoming OneMain’s talented team members as we build on our mutual success to enhance the growth potential of the combined company and deliver superior value for our shareholders."

The combined company will be led by Springleaf CEO Jay Levine, and Mary McDowell will continue as CEO of OneMain.

Initially, officials explained the combined company will maintain both the Springleaf and OneMain brand with the expectation of migrating to the OneMain brand beginning in mid-2016.

After closing, the combined company will be run from Springleaf’s executive office in Connecticut, and will maintain significant presences in Evansville, Ind., and Baltimore.

The company said it will also maintain key operations in:

— Wilmington, Del.
— Chicago
— London, Ky.
— Mendota Heights, Minn.
— Tempe, Ariz.
— Fort Mill, S.C.
— Irving and Fort Worth, Texas.

Officials highlighted the branch networks of the two companies are highly complementary. However, Springleaf said it expects to consolidate approximately 200 branches beginning in the middle of next year.

“Detailed planning for the integration of the two companies will begin immediately upon closing, with actual integration of systems and facilities expected to commence in mid-2016,” Springleaf said.

Bank of America Merrill Lynch, Barclays, Credit Suisse and Goldman Sachs provided financial advice to Springleaf on the transaction. Skadden, Arps, Slate, Meagher & Flom provided legal advice to Springleaf on the transaction.

Advising OneMain on the transaction was Citi as financial advisor and Davis Polk & Wardwell as legal advisors.