General Electric Co.is trying to sell the asset management arm that oversees the company’s pension plan as it continues to cut back on non-manufacturing operations.
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Previous to the GE deal, BMO acquired Marshall & Ilsley Corp.in 2011 for $4.1-billion (Canadian) and UK-based investment manager F&C Asset Management PLC in 2014 for $1.3-billion.
GE Capital chairman and CEO, Keith Sherin, remains confident regarding the deal and commented: “With the sale of our Transportation Finance business to BMO, we have again found a buyer with a customer centric culture who is committed to the industry and growing this business with the help of our tenured and experienced team”. Earlier this year, Synchrony Financial took a lease for the entirety of the office park at 777 Long Ridge Road as the retail finance company readies to separate from GE as an independent company based in Stamford. With this transaction, the total for 2015 announced sales is approximately $85 billion.
The company said it is seeking buyers for GE Asset Management that have experience managing retirement plan assets.
GE, which is based in Fairfield, has put more focus on its industrial businesses in the past year, shrinking or selling off its other entities.
For GE, the deal marks a step in right direction, as it is in the process of divesting its financial services business. It said in August it would sell its health-care lending unit to Capital One for $9 billion.
The price will be based “on net earning assets balance on closing, plus a premium”, according to the bank’s presentation.
GE decided to trim down GE Capital, the parent unit of its real estate business, after the division’s lack of access to credit during the 2008 financial crisis endangered the stability of the parent company.
After the release of the current sell-off of the transportation unit, the stock went up 0.28% during after-hours and was trading at $24.74.
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BMO estimates that the deal, which is expected to close in the bank’s fiscal first quarter of 2016, will boost its adjusted profit by 3 per cent.
