$9 billion: GE sells US medical finance
According to foreign media reports, the United States General Electric Company said on the 11th that it plans to sell its US medical and financial sector to the US Capital One Financial Corporation for $9 billion, and will also sell about $600 million in real estate assets. This is the latest development in GE's de-financialization strategy.
The deal will include medical-related loans worth approximately $8.5 billion and is expected to be completed in the fourth quarter of this year. General Electric also said on the 11th that it has agreed to sell about $600 million in real estate investment in the medical and financial sector to another buyer, but did not disclose specific information about the buyer.
According to reports, the source said that the price of 8.5 billion US dollars is lower than the valuation of GE's $1 to 11 billion in the search for buyers in the medical and financial sector in June, but the decrease in transaction price is mainly due to the removal of a value from the transaction. About $2 billion in assets.
General Electric plans to divest about $100 billion in financial assets by the end of the year. In addition to the amount of the deal, the announced financial asset divestiture plan has reached $78 billion. In April, GE agreed to sell about $26 billion in real estate assets to Wells Fargo and Blackstone, and then sold its private equity portfolio to the Canadian Pensions Board for $12 billion. GE's ultimate goal is to divest a total of $200 billion in financial assets by the end of 2016, but will retain the financial sector associated with industrial operations.
GE Capital, a GE financial unit, is closely regulated because it is large and has a large potential risk in its portfolio of loans, which is classified as a “systemically important financial institution†by US regulators. General Electric said it hopes to get rid of the "systemically important financial institutions" next year by divesting financial assets. At the same time, the uncertainty of the financial market has increased the risk and the return has decreased. Investors are also urging GE to return to the fundamentals of its industrial business.
At present, the medical industry is developing with good momentum and M&A activity is active. GE's medical finance division provides direct loans to medical products and services companies, as well as real estate loans for caregivers, medical practice activities and assisted living equipment operators. In 2014, GE's US medical finance division provided approximately $10.5 billion in funding for various medical industry mergers and acquisitions and financing activities. It was reported last week that Capital One has beaten other competitors and is exclusively negotiating with GE for the acquisition.
For Capital One, the deal will expand the size of its medical loan business. Michel Sloem, president of Capital One's commercial banking division, said: "This transaction will put us in the leading position in the medical loan sector."
Capital One is now more famous for credit card business and has been working hard to provide a more comprehensive financial business in the near future. Capital One currently holds approximately $200 billion in deposits and $310 billion in assets and is one of the largest financial institutions in the United States.
According to market research firm Dealogic, the deal is the fourth largest M&A in the US banking industry since 2008. Capital One acquired Dutch International Group's online banking business for $9 billion in 2011.
After the announcement on the 11th, Capital One's share price rose sharply to $81.43 per share in US after-hours trading, and General Electric's share price rose slightly to $25.80 per share.
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