General Electric and Bank of Montreal are reportedly in talks over an acquisition in favor of the latter. On Thursday, GE announced that is is ready to let go of its transportation financing unit and it plans to sell this to Bank of Montreal.
According to the New York Times, GE has already set its sights on its industrial businesses from now one. Hence, it is selling its transportation finance unit despite being the largest financier to the commercial truck and trailer segment in North America.
The terms between the agreement of the two companies have not been disclosed, but it was reported that the acquired business has about $11.5 billion worth of net earning assets as of June, as per Daily Sun Knoxville.
On a late afternoon conference call, analysts were told that the purchase price could close at $13 billion since the purchase price is going to be based off of the net earning assets balance.
“The… assets we are acquiring have many of the characteristics of other business segments in which BMO has proven capability. This represents a unique opportunity to grow our commercial customer base,” said CEO of Bank of Montreal Bill Downe.
The deal between GE and Bank of Montreal is projected to close in the first quarter, and the Canadian bank is expecting a boost on the return immediately.
GE’s transportation finance business is headquartered in Irving, Texas, and it has around 600 employees.
The selling of GE’s transportation finance business came a month after it announced its decision to move out of its finance business. At the time, the company has also decided to divest its U.S. healthcare unit to Capital One Financial for $9 billion, Banking Business Review has learned.
"We continue to execute on our asset sales and are on track to reduce our ending net investment (ENI) by $100bn by the end of 2015 and expect to be substantially done with our exit strategy by the end of 2016,” GE Capital chairman and CEO Keith Sherin said at the time.
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