Cardholder Management Services (CardWorks), a privately-held consumer finance lender and servicer and digital financial services company Ally Financial, have ended their previously announced merger agreement.

The decision to terminate the merger was approved by the board of directors of both the companies in the anticipation of the impact of Covid-19 pandemic on the economy.

As the proposed merger agreement, which was announced in February, Ally Financial would have acquired CardWorks for $2.65bn.

Of this amount, the company was supposed to pay $1.35bn in cash and $1.30bn in common stock or 39.5 million shares to CardWorks.

Ally Financial expected the acquisition to further diversify its product offerings, It would have added adding an established credit card platform, full-spectrum servicing and recovery operation and a nationwide merchant acquiring business.

As the decision was mutual, neither party will be required to pay a termination fee or break-up fee.

Founded in 1987, CardWorks is a servicer of nationally-branded Mastercard or Visa cards, private label cards, secured cards, and other unique products.

CardWorks founder, chairman and CEO Don Berman said: “After careful consideration, Jeff Brown and I, along with our boards of directors, concluded that it would be in the best interest of our customers and our stakeholders, to terminate the agreement.

“CardWorks is in an exceptionally strong financial position and our long-term strategic priorities remain intact.

“Each of our business lines continues to perform extremely well during these challenging and uncertain times.”