Merrill Lynch Selling Unit to GE Capital
(12-24) 06:26 PST Norwalk, Conn. (AP) —
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 into other parts of its business.
GE said the acquisition, for an undisclosed sum, will also add $5 billion in commitments to GE Capital Commercial Finance’s base of $260 billion.
“These strong units fit perfectly with existing and very successful GE Capital businesses,” Mike Neal, vice chairman of GE said.
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.
“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 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.
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 of writedowns from bad bets on risky mortgage-backed securities. Global banks have written down an estimated $105 billion this year alone from exposure to mortgage-backed securities.
On Friday, Merrill’s shares rose on a report that the nation’s biggest brokerage is seeking a $5 billion investment from Singapore’s state-owned investment agency Temasek Holdings.
GE Capital offers businesses around the globe an array of financial products and services. It’s Commercial Finance unit has assets of over $260 billion and has its headquarters in Norwalk, Conn.
