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General Electric to Sell Most of Its Fleet-Financing Business
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General Electric will sell a majority of its fleet-financing business to a Canadian company called Element.

Summary: General Electric will sell a majority of its fleet-financing business to a Canadian company called Element.

According to the New York Times, General Electric has announced that it has agreed to sell its fleet-financing businesses in Australia, Mexico, New Zealand, and the United States. General Electric is selling the businesses for $6.9 billion to Element Financial Corporation of Canada. The Wall Street Journal adds that Element will become the largest fleet-leasing company in the country according to receivables from leasing contracts.

  
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General Electric also stated that it signed a separate memorandum of understanding that may result in the sale of its fleet businesses in Europe to Arval, which is an alliance partner of Element and a part of the French bank BNP Paribas.

The sale demonstrates General Electric’s efforts to move away from banking and focus on industrialism. It has sought to sell many of its assets in the General Electric Capital finance arm, and predicts that most of its General Electric Capital will be sold by the end of 2016. This month, it agreed to sell a division that finances leveraged buyouts to the Canada Pension Plan Investment Board. That deal is worth $12 billion.

CVS will acquire Target’s pharmacy and clinic business.

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Keith S. Sherin, the chairman and chief executive of General Electric Capital, commented, “We continue to demonstrate speed and execution on our strategy to sell most of the assets of GE Capital. We are on track to execute sales of $100 billion by the end of 2015 and expect to be substantially done by the end of 2016.”

The sales must meet regulatory approval before they may be finalized.



The sale of the businesses in Mexico and the United States is predicted to close in the third quarter. Australia and New Zealand’s deals should close in the fourth quarter.

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General Electric added that it hopes the Arval sale will be finalized in the fourth quarter as well, if the deal progresses.

General Electric Capital Fleet Services provides car and truck financing for both fleet management services and commercial vehicles. Over 1.5 million vehicles have been leased, managed, and serviced across the world.

In May, Charter merged with Time Warner Cable.

Element, a Toronto-based company, supplies equipment financing and fleet management services for a multitude of businesses, such as aircraft, rail, and commercial vehicle financing. In 2013, Element acquired General Electric Capital’s Canadian fleet business. It has roughly $12.5 billion in assets. Reuters adds that Element’s stock will likely see a boost due to the deal.

Steven Hudson, the chief executive of Element, said, “Adding these very high quality businesses to our existing fleet operations firmly establishes Element as a leader in the North American fleet management industry.”

In November, Halliburton acquired Baker Hughes for $34.6 billion.

Arval leases vehicles in 25 countries and operates in another 14 countries through various partners.

JPMorgan Chase and Weil, Gotshall & Manges advised General Electric throughout the deal. Element received guidance from Blake, Cassels & Graydon; Cravath, Swaine & Moore; Barclays; Infor Financial; and CIBC.

Source: New York Times

Photo credit: theflud.com



 

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