GE Selling Some Fleet Businesses to Element for $6.9B

The Capital Fleet Services from GE delivers auto and truck financing for commercial automobiles and fleet management services, counting above 1.5 million vehicles leased, serviced and managed internationally.

GE will retain divisions that support manufacturing including aircraft leasing, a boost for jet-engine production while unloading the fleet unit and similar businesses.

Element Financial said the acquisition includes staff, offices, agreements, intellectual property and other assets required to operate the businesses in each jurisdiction.

One of Element’s partners, Paris-based Arval, has bought GE’s European fleet management operations.

GE, advised by JPMorgan, said both deals together represent a total of $8.6 billion in assets.

“We see the opportunity to expand our fleet management operations into Australia and New Zealand as an excellent fit with our established North American operations”, said Bradley Nullmeyer, Element’s President. “That’s where we will turn our attention to”.

If Element closes the deal, it would make for the second fleet management company acquired by the Canadian equipment financial in the past year. The Transaction constitutes an “Eligible Transaction” under the terms of the outstanding subscription receipts and extendible convertible unsecured subordinated debentures issued by Element on May 29, 2015.

The company explained integration plans will be finalized prior to closing in an effort to align the fleet management operations of the two companies. Significant savings are expected to be realized from revenue synergies, expense reductions and cost of funds improvements.

The accord builds on GE’s June 9 deal to sell most of its USA private-equity lending business to Canada Pension Plan Investment Board for about $12 billion.

The Transaction is subject to regulatory and other approvals. The company has has also signed a memorandum of understanding for… GE Capital sold its Canadian fleet business to Element in 2013. With this, GE Capital’s total announced sales stands at $63bn on way to executing sales to the tune of $100bn by this year-end. Blake, Cassels and Graydon and Cravath, Swaine and Moore acted as legal counsel to Element.

In a separate transaction, the $272.9 billion market capped infrastructure firm has inked a binding agreement with a subsidiary of French financial holding firm BNP Paribas SA (ADR) (OTCMKTS:BNPQY) to sell its European fleet servicing business. Arval and Element work as partners in North America.