General Electric Company (NYSE:GE) has consented to sell its fleet units in New Zealand, Mexico, and Australia for $6.9 billion.
The deal will also include divesting some of its Assets in Europe as part of its last steps in selling off its banking assets. The fleet assets that are managed by GE Capital will be transferred to Element Financial Corp., which will in turn gain status as the biggest fleet leasing firm in the United States.
Element Financial had previously engaged in a similar deal. In June 2013, it purchased GE’s North American fleet units. The new acquisition will include intellectual property, agreements, Offices, and Staff among other assets that are part of the normal business operations. The transactions are expected to be completed by the end of the year. Once it is completed, Element’s fleet management operations will have more than $13 billion net earning fleet assets and more than 1 million vehicles under its name.
Element’s Chief Executive Officer Steven Hudson believes that the new acquisition will give the company better bargaining capacity to purchase more vehicles at subsidized prices while at the same time allowing the company to lower the prices.He stated that the company’s clients would have had to incur higher costs by having their own fleets.
Element Financial plans to fund the acquisition with finances from the C$5.9 billion in debt and the C$2.7 billion securities offering. The firm also estimates that annual revenue gains and cost savings from the acquired units will average $90 million to $95 million.
Selling the fleet unit is part of GE’s strategy to divest over $500 billion from the banking division. A few weeks ago, the company sold its private equity lending business to a Canadian Pension Fund. The deal was estimated at roughly 12 billion.
General Electric Company (NYSE:GE) is in talks with BNP Paribas SA (ADR) (OTCMKTS:BNPQY) to discuss the possibility of a deal to sell off its European fleet unit to Arval. If the deal is successful, more than 160,000 vehicles from 12 countries will go to Arval.
