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GE Capital acquiring Merrill Lynch middle-market commercial finance for undisclosed terms

GE Capital acquiring Merrill Lynch middle-market commercial finance for undisclosed terms

GE Capital, the financial unit of General Electric Co., said Monday it will acquire the bulk of the Merrill Lynch Capital commercial finance operations, allowing Merrill to redeploy about $1.3 billion (euro0.9 billion) into other parts of its business.
The news came as Merrill Lynch & Co. Inc. announced it sold a stake to Temasek Holdings and Davis Selected Advisors for $6.2 billion (euro4.3 billion).
Merrill has been trying to raise capital to help bail it out of huge losses related to the subprime mortgage crisis. Merrill has already taken $7.9 billion (euro5.49 billion) of writedowns from bad bets on risky mortgage-backed securities. Global banks have written down an estimated $105 billion (euro72.9 billion) this year alone from exposure to mortgage-backed securities.
GE Capital will buy Merrill Lynch Capital's corporate finance, equipment finance, franchise, energy and health care finance units. Merrill Lynch Capital's commercial real estate finance unit is not part of the transaction.
GE said the acquisition, for an undisclosed sum, will also add $5 billion (euro3.47 billion) in commitments to GE Capital Commercial Finance's base of $260 billion (euro180.58 billion).
"These strong units fit perfectly with existing and very successful GE Capital businesses," Mike Neal, vice chairman of GE said.
"This transaction reflects Merrill Lynch's continued strategic focus on divesting noncore assets and optimizing capital allocation, while also enabling the redeployment of approximately $1.3 billion (euro0.9 billion) of capital into other parts of our business," said John A. Thain, chairman and CEO of Merrill Lynch & Co. Inc., the parent company of Merrill Lynch Capital.
The deal is expected to close in the first quarter of 2008.
GE Capital offers businesses around the globe an array of financial products and services. Its Commercial Finance unit has assets of over $260 billion (euro180.58 billion) and has its headquarters in Norwalk, Connecticut.
In the Temasek deal, the investment fund for the government of Singapore will acquire $4.4 billion (euro3.06 billion) in Merrill Lynch common stock. Temasek has the option to purchase an additional $600 million (euro416.72 million) of common stock by March 28. The investment is for no more than 10 percent of common stock. Davis Selected Advisors will receive common stock from an $1.2 billion (euro0.83 billion) investment as well.
The sales are expected to close by the middle of January.


Updated : 2021-04-15 16:57 GMT+08:00