General Electric Co said it would sell its US healthcare finance unit to credit card lender Capital One Financial Corp for about USD 9 billion as it winds down its finance arm and returns to its industrial roots.
The deal, which includes the sale of healthcare-related loans worth USD 8.5 billion, brings GE one step closer to achieving its target of shedding about USD 100 billion worth of finance assets by the end of this year.
The latest sale, expected to close in the fourth quarter, will take GE's announced divestitures of finance assets to about USD 78 billion.
Reuters reported last week that Capital One was in exclusive talks to acquire GE's healthcare finance unit and that it had outbid other potential buyers in an auction for the unit.
The size of GE's finance arm GE Capital and the potential risk stemming from its lending portfolio has made it subject to government oversight. GE plans to apply next year to escape its designation as a systemically important financial institution following the sale of finance assets.
For Capital One, the deal will bolster its healthcare lending operations.
"This addition will catapult us to a leading market position in providing financial services to the healthcare sector," said Michael Slocum, president of Capital One's Commercial Bank.
GE's healthcare finance unit offers direct loans to healthcare product and services companies as well as real estate loans to operators of assisted living facilities, nursing homes and medical practices.
GE also said on Tuesday it agreed to sell about USD 600 million of the unit's real estate equity investments to another buyer, which it did not name.
In April, GE agreed to sell about USD 26 billion of real estate assets to Wells Fargo & Co and Blackstone Group LP. Subsequently, GE agreed to sell its private equity lending portfolio to Canada Pension Plan Investment Board for USD 12 billion.
Citigroup Global Markets and J.P. Morgan Securities LLC advised GE and Hogan Lovells US LLP was the legal adviser.
Credit Suisse and Wells Fargo Securities were financial advisers to Capital One and Wachtell, Lipton, Rosen & Katz was the legal adviser.
Capital One's shares were up marginally at USD 81.43 in extended trading on Tuesday. GE's stock also rose slightly to USD 25.80.
Discover the latest Business News, Sensex, and Nifty updates. Obtain Personal Finance insights, tax queries, and expert opinions on Moneycontrol or download the Moneycontrol App to stay updated!
