General Electric (GE) to Consider Bids for Japanese Commercial Operations

Shares of the General Electric Company (GE) were trading down -0.19 or -0.78 percent to $24.32 in Friday's premarket after news that large Japanese banks are among the bidders for the company's Japanese commercial financing operations. General Electric stock closed at $24.51, down -0.06 or -0.24 percent in Thursday's regular trading session.

Fairfield, Connecticut based General Electric is an American multinational conglomerate best known as a manufacturer of electrical appliances.
The company, founded by Thomas Edison in 1892 has expanded into aviation, consumer electronics, oil and gas production and exploration, electric motors, locomotives, software, lighting, healthcare, energy and finance among other businesses. The company is divided into several divisions, which include Aviation, Capital, Energy Management, Healthcare, Oil and Gas, Power and Water and Transportation.

According to reports from people familiar with the matter, several Japanese firms have placed bids for General Electric's Japanese commercial lending and leasing business. General Electric's Japanese financing arm is estimated to have an asset value in excess of $5 billion.

Among companies said to have submitted non-binding bids are Orix Corp, Sumitomo Mitsui Financial Group, Mitsubishi UFJ Financial Group Inc. and Sumitomo Mitsui Trust Holdings. The companies will conduct a due diligence review of the operations over the next few weeks to arrive at an estimate of their fair value.

Today is the deadline for the first round of bids on the Japanese unit, the sale of which is expected to close by the end of November. As of this writing, spokesmen for General Electric or the bidding companies were not available to comment on the matter.

The sale of the Japanese financing unit is part of General Electric's plan to divest approximately $200 billion in GE Capital assets, which was unveiled last April. The sale of assets will move the company away from financing and allow the conglomerate to concentrate on its manufacturing businesses.

In August, General Electric agreed to sell its GE Capital Bank U.S. online deposit platform to Goldman Sachs Group Inc. (GS). The assets held by GE Capital in the online deposit platform are estimated to be worth $16 billion. Also last month, GE sold its U.S. healthcare financing business to credit card company Capital One Finance Corp for approximately $9 billion.

General Electric sold its European private equity financing business to Sumitomo Mitsui Banking Corp in July, the banking unit of SMFG. The sale of the unit was for $2.2 billion, with SMFG expressing interest in purchasing GE's U.S. railcar unit.

Last June, General Electric sold its private equity lending portfolio to the Canada Pension Plan Investment Board (CPPIB) for $12 billion. The Antares unit, which was sold to CPPIB was a leading lender to middle market private equity backed transactions in the U.S. providing more than $120 billion in loans over the last five years. General Electric stock is showing a muted reaction by investors to the news; nevertheless, the company is on track to divest a large portion of its financing operations before the end of this year.

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Published on Sep 4, 2015
By Jay Hawk
Jay Hawk
Jay Hawk enjoyed a 12-year professional financial markets career incorporating extensive first hand futures and options experience obtained by trading in the stock, commodity and forex markets on U.S. exchanges. Since retiring as a full-time financial market professional, he has been actively trading stock, commodities, forex and options for his own account and managing funds for others, as well as writing financial market commentary and educational articles.

Copyrighted 2020. Content published with author's permission.

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