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GE to Sell Majority of Global Fleet Business to Element Financial Corporation and Arval

June 29, 2015 2:26 AM EDT
  • Transaction Aligns with GE’s Strategy to Create Simpler, More Valuable Industrial Company
  • GE Capital’s Announced Sales Now Total Approximately US$63 Billion

FAIRFIELD, Conn.--(BUSINESS WIRE)-- 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.

Investor:
Matt Cribbins, +1-203-373-2424
[email protected]
or
Media:
GE Capital:
Susan Bishop, +1-203-750-5362
[email protected]
or
GE:
Seth Martin, +1-203-572-3567
[email protected]
or
Element:
Longview Communications, +1-416-386-1067 ext. 2233
[email protected]
or
Arval:
Sandrine Ferré, (+33) 1 57 69 50 80
[email protected]
or
Christelle Pailles, (+33) 1 57 69 53 69
[email protected]
or
BNP Paribas:
Malka Nusynowicz, (+33) 1 42 98 36 25
[email protected]

Source: GE



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