Element Financial (TSE:EFN), Canadian financial services company, said it will buy General Electric’s (NYSE:GE) fleet management operations in the United States, Mexico, Australia and New Zealand for C$8.6 billion in cash.
GE Capital Fleet Services provides commercial car and truck financing and fleet-management services.
Toronto-based Element Financial said in a statement the acquisition includes staff, offices, agreements, intellectual property and other assets required to operate the businesses in each jurisdiction.
Element had already bought the Canadian operations of GE Capital's North American fleet management business in June 2013.
"Adding these very high quality businesses to our existing fleet operations firmly establishes Element as a leader in the North American fleet management industry," Element CEO Steven Hudson.
Element plans to finance the acquisition with proceeds from a recent C$2.7 billion securities offering and with C$5.9 billion in debt, while forecasting $90 million to $95 million in yearly cost savings and revenue gains from the deal.
GE also signed a memorandum of understanding to sell its European fleet businesses to Arval, a fully-owned subsidiary of BNP Paribas. The Element-Arval Global Alliance, on completing the deals, will be able to manage customer fleets in more than 40 countries, Element said in a statement.
GE, the American multinational conglomerate, is looking to sell most of its capital assets over the next 18 months as part of a plan to grow its industrial businesses as the principal source of earnings.
The company wants to reduce the size its financial services business in order to avoid regulatory hurdles and oversight.
Shares of GE dropped 1 percent to $26.83 at 10:43 a.m. in New York, while shares of Element gained 1.7 percent to C$19.19 in Toronto.
BMO Capital Markets, Barclays, INFOR Financial Inc and CIBC acted as financial advisers to Element, while J.P. Morgan Securities LLC advised GE.