- Agreement includes GE Capital
Commercial Distribution Finance, Vendor Finance and Corporate
Finance Businesses
- Transaction Nearly Completes Reduction
of U.S. Lending and Leasing Businesses
- GE Capital Total Announced Dispositions
to Date Passes $126 Billion
- GE Continues Transformation to More
Focused Digital Industrial Company
GE (NYSE: GE) has reached an agreement to sell GE Capital’s
global Commercial Distribution Finance, North American Vendor
Finance and Corporate Finance platforms to Wells Fargo & Co
(NYSE: WFC). The sale includes ending net investment (ENI) of
approximately $30 billion (about $32 billion of assets) and
approximately 3,000 employees. It is expected to be completed in
the first quarter of 2016. Other terms of the transaction were not
disclosed.
“This is our largest transaction to date and a critical step in
our efforts to reduce the size of GE Capital,” said Keith Sherin,
GE Capital chairman and CEO. “Since our April 10 announcement,
we’ve signed more than $126 billion in transactions, which is over
60 percent of our overall plan, and are on track to become less
than 10 percent of GE’s earnings as the company transitions to a
more focused digital industrial company.
“We’re very pleased to sell this significant piece of our
business to Wells Fargo, a respected industry leader who is
committed to helping our customers grow and succeed. Wells Fargo’s
strong operations, risk and regulatory expertise, combined with
their customer focus, will allow them to seamlessly integrate our
businesses,” Sherin added.
The transaction includes the leadership, employees and platforms
of GE Capital Commercial Distribution Finance (CDF) and GE Capital
Vendor Finance.
CDF serves customers in 60 countries providing customized
inventory financing to fund the flow of finished durable goods from
manufacturers to dealers. The business operates globally in six
core industries: marine, recreational vehicles, motorsports,
outdoor products, technology, electronics and appliances.
Vendor Finance is a leading provider of private label and
co-branded programs for OEMs, dealers and end users across four
core industries in the U.S. and Canada: office imaging,
construction, material handling and technology.
The transaction also includes essentially all of GE Capital
Corporate Finance’s portfolio of senior secured loans and leases
for middle market companies across the U.S. and Canada, as well as
some employees. Corporate Finance has 10 specialized equipment
lending and leasing verticals, with particular expertise in food
and beverage, forestry, metals, restructuring and retail.
When completed, the transaction will contribute approximately
$4.2 billion of capital to the overall target of approximately $35
billion of dividends expected to be paid to GE under the
disposition plan (subject to regulatory approval). With this
transaction, the total ENI for 2015 announced sales is more than
$126 billion.
“We continue to execute quickly on our asset sales. With this
transaction, GE Capital has only one significant platform remaining
for sale in the U.S., our Franchise Finance unit with $5.5 billion
of ENI. Once the U.S. transactions have closed and the split off of
GE Capital’s retail finance business, Synchrony Financial, has
occurred, GE Capital expects to file an application in 2016 for
de-designation as a Systemically Important Financial Institution as
its footprint in the U.S. will be significantly reduced. Globally,
GE Capital expects to be substantially done with its exit strategy
by the end of 2016,” said Sherin.
As previously announced, GE is embarking on a strategy to create
a simpler, more valuable company by reducing the size of its
financial businesses through the sale of most GE Capital assets and
by focusing on continued investment and growth in its world-class
industrial businesses. GE will retain the financing businesses that
relate directly to GE’s industrial businesses.
The transaction with Wells Fargo is subject to customary closing
conditions. Goldman Sachs and Credit Suisse provided financial
advice to GE and Weil Gotshal & Manges LLP provided legal
advice.
About GE
GE (NYSE: GE) is the world’s Digital Industrial
Company, transforming industry with software-defined
machines and solutions that are connected, responsive and
predictive. GE is organized around a global exchange of
knowledge, the "GE Store," through which each business shares and
accesses the same technology, markets, structure and intellect.
Each invention further fuels innovation and application across our
industrial sectors. With people, services, technology and scale, GE
delivers better outcomes for customers by speaking the language of
industry. 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.
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 that 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 our
announced plan to reduce the size of our financial services
businesses as well as other aspects of that 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 and Appliances
and our announced plan and transactions to reduce the size of our
financial services businesses, 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.
This document includes certain forward-looking projected
financial information that is based on current estimates and
forecasts. Actual results could differ materially.
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version on businesswire.com: http://www.businesswire.com/news/home/20151013006072/en/
Investors: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.com
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