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General Electric to Sell $30 Billion Commercial Leasing and Lending Business to Wells Fargo

Madeleine Johnson

On Tuesday, well-known technology services company General Electric Co (GE) is selling its $30 billion business (roughly $32 billion in assets) in commercial lending and leasing to San Francisco-based bank Wells Fargo (WFC). The deal is part of GE’s previously announced restructuring plan in which the company is seeking to create a simpler, more valuable company.

The deal includes the management, employees (which there is about 3,000 of), and platforms of GE Capital Commercial Distribution Finance and GD Capital Vendor Finance. This sector of GE provides financing to support the flow of goods from manufacturers to dealers in six core industries: marine, recreational vehicles, motorsports, outdoor products, technology, electronics and appliances.

In a company news release, GE capital Chairman and CEO Keith Sherin said “this is our largest transaction to date and a critical step in our efforts to reduce the size of GE Capital. Since our April 10 announcement, we’ve signed more than $126 billion in transactions, which is over 60 percent of our overall plan, and are on track to become less than 10 percent of GE’s earnings as the company transitions to a more focused digital industrial company.”

Wells Fargo will also take over GE Capital Corporate Finance’s portfolio of senior secured loans and leases for middle market companies across the United States and Canada, as well as an unspecified number of employees, GE said. 

When the transaction is complete, it will bring in close to $4.2 billion to the target goal of an approximate $35 billion dividend to be paid out to GE. Goldman Sachs and Credit Suisse gave financial advice to GE and Weil Gotshal & Manges LLP provided legal advice.

“We’re very pleased to sell this significant piece of our business to Wells Fargo, a respected industry leader who is committed to helping our customers grow and succeed. Wells Fargo’s strong operations, risk and regulatory expertise, combined with their customer focus, will allow them to seamlessly integrate our businesses,” Sherin added.

The deal is expected to close in the first quarter of 2016. Other deal terms were not disclosed.

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