- Transaction Aligns with GE’s Strategy
to Create Simpler, More Valuable Industrial Company
- GE Capital’s Announced Sales Now Total
Approximately US$63 Billion
GE [NYSE:GE] announced today that it has reached an agreement to
sell its U.S., Mexico, Australia and New Zealand fleet businesses
to Element Financial Corporation (TSX:EFN) for US$6.9 billion.
Separately, GE has signed a memorandum of understanding for the
potential sale of its European fleet businesses to Arval, a fully
owned subsidiary of BNP Paribas. Arval and GE will now consult with
their respective works councils. The transactions’ completion will
also be subject to customary regulatory and other local corporate
or antitrust approvals.
“We continue to demonstrate speed and execution on our strategy
to sell most of the assets of GE Capital,” said Keith Sherin, GE
Capital chairman and CEO. “We are on track to execute sales of
US$100 billion by the end of 2015 and expect to be substantially
done by the end of 2016,” he added.
GE Capital Fleet Services provides commercial car and truck
financing and fleet management services, with more than 1.5 million
leased, serviced and managed vehicles around the world. Element
Financial Corporation is one of North America’s premier fleet
management and equipment finance companies. GE Capital sold its
Canadian fleet business to Element in 2013. BNP Paribas, through
its fully owned subsidiary, Arval, specializes in full service
vehicle leasing in 25 countries and in 14 other countries through a
network of partners, including a global alliance with Element.
Excluded from the transactions is GE Capital’s fleet business in
Japan.
“Both Element and Arval are invested in and committed to growth
in the fleet industry and our customers will benefit from their
strength and expertise,” said Sherin.
As previously announced, GE is embarking on a strategy to focus
on its high-value industrial businesses and is selling most GE
Capital assets. GE and its Board of Directors have determined that
market conditions are favorable to pursue disposition of these
assets over the next 18 months. GE will retain the financing
“verticals” that relate to GE’s industrial businesses.
Both transactions represent an aggregate of about $8.6 billion
of ending net investment (ENI), approximately US$6.0 billion to
Element and about US$2.6 billion to Arval. This brings GE Capital’s
total announced sales to about US$63 billion to date. GE is on
track to execute sales of US$100 billion by the end of 2015. The
transactions would, if completed, contribute approximately US$1.8
billion of capital to the overall target of approximately US$35
billion of dividends expected to GE under this plan (subject to
regulatory approval).
Sherin concluded, “This announcement is the next step in GE’s
transformation to a more focused industrial company.”
The U.S. and Mexico transaction is expected to close in the
third quarter of 2015, and the A&NZ transaction in the fourth
quarter of 2015, subject to customary regulatory and other
approvals. If approved, the Arval transaction is targeted to close
in the fourth quarter of 2015.
J.P. Morgan Securities LLC provided financial advice to GE and
Weil, Gotshal & Manges LLP provided legal advice.
About GEGE (NYSE:GE) imagines things others don’t, builds
things others can’t and delivers outcomes that make the world work
better. GE brings together the physical and digital worlds in ways
no other company can. In its labs and factories and on the ground
with customers, GE is inventing the next industrial era to move,
power, build and cure the world. www.ge.com.
GE’s Investor Relations website at www.ge.com/investor and our
corporate blog at www.gereports.com, as well as GE’s Facebook page
and Twitter accounts, including @GE_Reports, contain a significant
amount of information about GE, including financial and other
information for investors. GE encourages investors to visit these
websites from time to time, as information is updated and new
information is posted.
About Element Financial Corporation
With total assets of approximately C$21 billion, Element
Financial Corporation is one of North America’s leading fleet
management and equipment finance companies. Element operates across
North America in four verticals of the equipment finance market –
Commercial & Vendor Finance, Aviation Finance, Railcar Finance
and Fleet Management.
About ArvalFounded in 1989 and fully owned by BNP
Paribas, Arval specialises in full service vehicle leasing. Arval
offers its customers – professionals, SMEs and large international
corporates – tailored solutions that optimise their employees’
mobility and outsource the risks associated with fleet management.
Expert advice and service quality, which are the foundations of
Arval’s customer promise, are delivered in 25 countries by over
4,000 employees, and in 14 other countries through a network of
partners. Arval’s total leased fleet adds up to 725,000 vehicles
throughout the world (December 2014). Within BNP Paribas, Arval
belongs to the Retail Banking core activity.
Caution Concerning Forward-Looking Statements:This
document contains “forward-looking statements” – that is,
statements related to future, not past, events. In this context,
forward-looking statements often address our expected future
business and financial performance and financial condition, and
often contain words such as “expect,” “anticipate,” “intend,”
“plan,” “believe,” “seek,” “see,” “will,” “would,” or “target.”
Forward-looking statements by their nature address matters that
are, to different degrees, uncertain, such as statements about our
announced plan to reduce the size of our financial services
businesses, including expected cash and non-cash charges associated
with this plan; expected income; earnings per share; revenues;
organic growth; margins; cost structure; restructuring charges;
cash flows; return on capital; capital expenditures, capital
allocation or capital structure; dividends; and the split between
Industrial and GE Capital earnings. For us, particular
uncertainties that could cause our actual results to be materially
different than those expressed in our forward-looking statements
include: obtaining (or the timing of obtaining) any required
regulatory reviews or approvals or any other consents or approvals
associated with our announced plan to reduce the size of our
financial services businesses; our ability to complete incremental
asset sales as part of this plan in a timely manner (or at all) and
at the prices we have assumed; changes in law, economic and
financial conditions, including interest and exchange rate
volatility, commodity and equity prices and the value of financial
assets, including the impact of these conditions on our ability to
sell or the value of incremental assets to be sold as part of this
plan as well as other aspects of this plan; the impact of
conditions in the financial and credit markets on the availability
and cost of GECC’s funding, and GECC’s exposure to counterparties;
the impact of conditions in the housing market and unemployment
rates on the level of commercial and consumer credit defaults;
pending and future mortgage loan repurchase claims and other
litigation claims in connection with WMC, which may affect our
estimates of liability, including possible loss estimates; our
ability to maintain our current credit rating and the impact on our
funding costs and competitive position if we do not do so; the
adequacy of our cash flows and earnings and other conditions which
may affect our ability to pay our quarterly dividend at the planned
level or to repurchase shares at planned levels; GECC’s ability to
pay dividends to GE at the planned level, which may be affected by
GECC’s cash flows and earnings, financial services regulation and
oversight, and other factors; our ability to convert pre-order
commitments/wins into orders; the price we realize on orders since
commitments/wins are stated at list prices; customer actions or
developments such as early aircraft retirements or reduced energy
demand and other factors that may affect the level of demand and
financial performance of the major industries and customers we
serve; the effectiveness of our risk management framework; the
impact of regulation and regulatory, investigative and legal
proceedings and legal compliance risks, including the impact of
financial services regulation and litigation; adverse market
conditions, timing of and ability to obtain required bank
regulatory approvals, or other factors relating to us or Synchrony
Financial that could prevent us from completing the Synchrony
Financial split-off as planned; our capital allocation plans, as
such plans may change including with respect to the timing and size
of share repurchases, acquisitions, joint ventures, dispositions
and other strategic actions; our success in completing, including
obtaining regulatory approvals for, announced transactions, such as
the proposed transactions and alliances with Alstom, Appliances,
Real Estate and Fleet Services, and our ability to realize
anticipated earnings and savings; our success in integrating
acquired businesses and operating joint ventures; the impact of
potential information technology or data security breaches; and the
other factors that are described in “Risk Factors” in our Annual
Report on Form 10-K for the year ended December 31, 2014. These or
other uncertainties may cause our actual future results to be
materially different than those expressed in our forward-looking
statements. We do not undertake to update our forward-looking
statements.
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version on businesswire.com: http://www.businesswire.com/news/home/20150628005087/en/
Investor:Matt Cribbins,
+1-203-373-2424matthewg.cribbins@ge.comorMedia:GE
Capital:Susan Bishop,
+1-203-750-5362susan.bishop@ge.comorGE:Seth Martin,
+1-203-572-3567seth.martin@ge.comorElement:Longview
Communications, +1-416-386-1067 ext.
2233media@elementcorp.comorArval:Sandrine Ferré, (+33) 1 57
69 50 80sandrine.ferre@arval.comorChristelle Pailles, (+33) 1 57 69
53 69christelle.pailles@arval.comorBNP Paribas:Malka
Nusynowicz, (+33) 1 42 98 36 25malka.nusynowicz@bnparibas.com
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