General Electric (NYSE:GE) conglomerate is rumored to be in advanced talks to cede its US$9 billion vehicle fleet management division GE Capital Fleet Services to Toronto based Canadian Element Financial (TSE:EFN).
Rumors of the deal on Tuesday afternoon sent Element‘s shares to the highest level in a month, increasing by 4.7 percent to close at C$19.10.
However, there is no conclusive deal yet for the GE’s subsidiary which leases and manages 1.4 million cars and trucks mainly in the United States for medium and large companies.
Element raised C$2.5 billion in equity last week to finance “future acquisitions” and has already established a link to GE, as it purchased GE Capital’s Canadian fleet business in 2013 for C$560 million.
The company also has experience in fleet management, having acquired PHH Corp’s North American fleet management business of PHH Corp, PHH Arval, for C$1.4 billion last year.
The fleet unit would be one of the US$30 billion in assets that Jeff Immelt, the group’s chief executive, said the company would sell before the end of the quarter.
For the full year, GE hopes to sell 100 hundred billion dollars in GE Capital assets by the end of 2015, more than its initial target of $90 billion.
"I would be disappointed if we did not do better," said Immelt in a statement.
General Electric wants to cut its reliance on its finance businesses, except for those backing the aircraft and other industrial units, shifting the company’s focus back on manufacturing operations.
Continuing in the theme of disposing non-manufacturing units, GE also plans to sell its private equity sponsor business, which has drawn interest from companies such as Apollo Global Management and Ares Management LP, according to people familiar with the matter.
As it divests of finance focused businesses, GE, already the world’s largest aircraft engine manufacturer, has started to replace these with sector leading industrial conglomerates.
GE, has agreed to buy France’s Alstom to its energy business for EUR 12.4 billion and is awaiting the approval of European competition authorities.
The European Commission announced in February to open a full investigation of this transaction and expects to make its decision by July 8, and sources consider it unlikely that the EU executive will endorse it without conditions.