Great Western to Acquire Leucadia Unit

The parent company of Great Western Savings has signed a definite agreement to buy the consumer finance arm of Leucadia National for $303 million, the two companies announced Monday.

The final agreement marks the second major move into the field of consumer finance for Great Western Financial, which is headquartered in Beverly Hills. Its initial plunge came in 1983, when it acquired Aristar, an insurance and consumer finance company, for $165 million.

Leucadia is a diversified, New York-based financial services company whose consumer finance offices operate in the Southeast mainly under the name of City Finance Co. Leucadia is expected to use money from the sale to finance the takeover activities for which it has become well known in recent years.

The sale covers 177 offices in 12 states that have more than $237 million in outstanding loan balances--also known as net receivables--and other assets.

Once the transaction is complete, the consumer finance arm of Great Western will have net receivables of more than $900 million. The companies said the sale should be final before the end of the year.

Great Western also clarified a previous remark by company Chairman James Montgomery, who had said his firm was going to pay “considerably less than $100 million” for the Leucadia properties. Montgomery made the remark in an interview last month when the agreement in principle was announced.

What Montgomery meant, company spokesmen explained Monday, was that the premium that Great Western is paying for the loans--not the sale price--would be less than $100 million. In this case, the premium would be approximately $66 million, because Great Western is paying $303 million for loans and other assets worth about $237 million.