GE Capital, Blackstone in $1.8bn deal

GE Capital plans to buy financial services company PHH Corporation for $1.8bn and sell one division to Blackstone.

GE Capital Solutions has agreed to acquire PHH Corporation, a provider of mortgage and vehicle fleet management services, for $1.8 billion (€1.4 billion).

The deal is expected to close in the third quarter of this year.

Shareholders will receive $31.50 in cash per share. That value is a 13.3 percent premium over the company’s closing price of $27.81 on March 14, PHH said in a statement. The company trades on the New York Stock Exchange under the ticker symbol PHH.

Mount Laurel, New Jersey-based PHH Corporation consists of two divisions: PHH Mortgage and PHH Arval. PHH Mortgage is a residential mortgage services provider. Based in Sparks, Maryland, PHH Arval provides vehicle fleet management services to corporate clients. GE Capital will purchase the entire company and then sell the mortgage division to The Blackstone Group after the deal has closed.

“The fleet management industry is changing rapidly, and issues such as the environment, safety, telematics, global reach and continued cost effectiveness are increasingly important,” George Kilroy, the president and chief executive officer of PHH Arval, said in a statement.

GE Capital has its own fleet services division. That unit is based in Eden Prairie, Minnesota and is led by its president and chief executive officer, Bob Mitchell.

Based in Danbury, Connecticut, GE Capital Solutions, is financing and asset management unit of General Electric Company, which trades on the New York Stock Exchange under the symbol GE.  The firm has about $100 billion in capital under management. It provides leasing lending and capital investment services to business customers in the US, Canada, Europe, Japan, Australia and New Zealand. The firm’s franchise finance division bought Trustreet Properties, an owner and manager of service retail properties like restaurants and service stations. That $3 billion deal closed in February.

Global private equity giant The Blackstone Group is currently investing an $18 billion private equity fund. The firm has made a number of investments in the financial services industry, including a $1.9 million investment in Health Markets, a life insurance marketing company, in April of 2006.