Merrill Sells Lending Unit to GE

Merrill Lynch buffeted by huge write-downs of mortgage-related securities, said it would sell most of its middle-market lending business, Merrill Lynch Capital to General Electric Co's commercial finance arm in a deal to free up capital. The value of the deal was not disclosed. But Merrill Lynch's new chief executive, John Thain, said in a statement that the sale of most of Merrill Lynch Capital will allow the brokerage to allocate about $1.3 billion of capital to other parts of the company.

The acquisition, expected to close in the first quarter of 2008, will add more than $10 billion in assets and $5 billion in commitments to GE Capital Commercial Finance’s base of $260 billion — and adds to existing businesses GE knows and knows how to operate.

 

“This transaction reflects Merrill Lynch’s continued strategic focus on divesting non-core assets and optimizing capital allocation," --John Thain, Merrill Lynch

GE Capital will buy Merrill Lynch Capital’s corporate finance, equipment finance, franchise, energy and health care finance units. Merrill Lynch Capital’s commercial real estate finance unit is not part of the transaction.

“These strong units fit perfectly with existing and very successful GE Capital businesses,” said Mike Neal, vice chairman of GE. “They are in industries we know well, so the potential for growth is compelling. In addition, this timely acquisition will expand our reach, and expand the value we can offer customers.”

“This transaction reflects Merrill Lynch’s continued strategic focus on divesting non-core assets and optimizing capital allocation, while also enabling the redeployment of approximately $1.3 billion of capital into other parts of our business,” said John A. Thain, chairman and CEO of Merrill Lynch.