GE to sell healthcare finance business to Capital One for $9 billion

Tue Aug 11, 2015 6:08pm EDT
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By Neha Dimri and Anil D'Silva

(Reuters) - General Electric Co (GE.N: Quote) said it would sell its U.S. healthcare finance unit to credit card lender Capital One Financial Corp (COF.N: Quote) for about $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 $8.5 billion, brings GE one step closer to achieving its target of shedding about $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 $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.   Continued...

The logo of General Electric is pictured at the 26th World Gas Conference in Paris, France, June 2, 2015.  REUTERS/Benoit Tessier