GE to Sell Commercial Lending, Leasing Businesses to Wells Fargo -- 2nd Update
October 13 2015 - 10:09AM
Dow Jones News
By Ted Mann, Emily Glazer and Lisa Beilfuss
General Electric Co. agreed on Tuesday to sell its commercial
lending and leasing business--the largest remaining chunk of its
U.S. financial services operations--to Wells Fargo & Co.
The sale, which includes about $32 billion of assets and 3,000
employees, is made up of GE Capital's global commercial
distribution finance, North American vendor finance and corporate
finance platforms. It is expected to be completed in the first
quarter of next year. Financial terms weren't disclosed.
GE disclosed plans earlier this year to part ways with the bulk
of GE Capital, the giant finance business that long accounted for
around half the company's profits but whose risks have rattled
investors and weighed on its stock.
With Tuesday's move, GE has sold off the guts of GE Capital's
middle-market lending business. This is perhaps the most important
milestone yet for the company in its exit from GE Capital, since
selling this U.S. based commercial lending business will be key to
applying to exit from supervision by the Federal Reserve. The
remaining $5 billion sliver of franchise finance, which makes loans
to acquire fast-food restaurants and other business franchises, is
expected to be sold later this year.
Keith Sherin, GE Capital chairman and CEO, called Tuesday's plan
"the largest transaction to date" in the company's bid to slim its
operations.
GE Capital executives have labored since April to sell off
pieces of the business, starting with those most likely to lose
their value and their most valuable employees if they languished on
the market, like the company's Antares unit, which lends to
private-equity firms. But to achieve GE's goals of rapidly
shrinking the lending business and finding a way out of the Fed's
oversight, the deals team needed to find a buyer for its U.S.
commercial lending and leasing business, the division sold to Wells
on Tuesday.
GE Capital deal makers have raced to meet parent company
executives' targets for striking deals. When GE announced its plans
in April, the company pegged a goal of $90 billion in announced
sales by year's end, then quickly raised that target to $100
billion or more. The company says it has now signed deals for more
than $126 billion of the more than $200 billion in assets the
company plans to sell. Focus will now turn to include more of GE
Capital's overseas operations, which are expected to be sold off
over the coming year.
Tim Sloan, head of wholesale banking at Wells Fargo, called the
acquisition an "outstanding opportunity" for the lender to deepen
relationships and strengthen its presence in key commercial lending
markets.
Chairman and Chief Executive John Stumpf had said publicly there
were possibilities for more work with GE following its commercial
real-estate loan portfolio acquisition earlier this year. The bank
acquired GE's railway leasing business in late September.
Write to Ted Mann at ted.mann@wsj.com, Emily Glazer at
emily.glazer@wsj.com and Lisa Beilfuss at lisa.beilfuss@wsj.com
Subscribe to WSJ: http://online.wsj.com?mod=djnwires
(END) Dow Jones Newswires
October 13, 2015 09:54 ET (13:54 GMT)
Copyright (c) 2015 Dow Jones & Company, Inc.
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