UPDATE 2-GE to sell its global fleet assets to Element and Arval

Mon Jun 29, 2015 10:29am EDT
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(Recasts, adds transaction value from source, additional information on deal)

By Euan Rocha

TORONTO, June 29 (Reuters) - General Electric on Monday said it agreed to sell its fleet management arm in the United States, Mexico, Australia and New Zealand to Canada's Element Financial for $6.9 billion, moving it a step further in its plan to shed financial assets.

Separately, GE signed a memorandum of understanding to sell its European fleet segment to Arval, a subsidiary of BNP Paribas . GE did not disclose the sale price for this part, but a source close to the matter said GE is set to receive some $3.3 billion for this business.

The sale is part of a plan unveiled in April to divest about $200 billion in GE Capital assets as it moves away from finance and focuses on manufacturing industrial equipment.

"We are on track to execute sales of $100 billion by the end of 2015 and expect to be substantially done by the end of 2016," said GE Capital Chief Executive Keith Sherin.

GE's deal with Element will transform the Canadian company into North America's largest fleet provider. The business finances and manages vehicles of companies that own vast fleets for sales staff, technicians and others on the move. GE sold its Canadian fleet unit to Element in 2013.

On closing of the deal, Element's combined fleet management assets will include over a million vehicles under contract and net earning fleet assets of over C$13 billion ($10.5 billion). Its total assets will exceed C$21 billion.

BTIG analyst Mark Palmer said he sees the acquisition giving Element's stock a "significant boost."   Continued...