General Electric Company Fleet Management Business Receives Interest From Element Financial

According to a Reuters report published yesterday, General Electric Company's (NYSE:GE) vehicle fleet management business has received interest from ELEMENT FINANCIAL (OTCMKTS:ELEEF). Citing people familiar with the matter, the report said that a possible deal could be reached between the two by the end of this month.

The company has reported that assets on GE Capital's vehicle fleet management business were valued at $9 billion. Element Financial would not be taking over the entire asset portfolio of the business; however, it is reported to be interested in acquiring the majority of the assets, with the rest being acquired by an unnamed party.

The North American division of the company is what Element Financial is primarily interested in. The business provides assistance to large entities that have a vast fleet of automobiles used for sales and distribution services, among others.

The business was put up for grabs by General Electric when it announced that it was looking to restructure itself, divesting out of majority of its financial arm, GE Capital, with the exception of those businesses that support the Industrials segment at General Electric. According to CEO Jeff Immelt's vision, announced in April this year, the company would be selling around $200 billion worth of financial assets.

The company's move comes as a result of Mr. Immelt's efforts to lower the exposure of the company to the financial markets, which had led to substantial losses being booked by the company stock during the financial crisis of 2008/09. While the company divests out of the Capital segment, it is turning its focus on to the Industrials segment at General Electric.

In its first quarter fiscal 2015 (1QFY15) earnings release, the company had stated that it was looking to become "a focused infrastructure & technology company." Moreover, the industrial segment at General Electric has shown promising growth in both top and bottom lines, with 1QFY15 industrial revenues and operating profits showing a 3% and 9% year-over-year (YoY) increase, respectively.

Investors have welcomed the strategy suggested by Mr. Immelt, with the company stock having gained 7.24% since the beginning of the year. The largest upward move seen by the stock was seen during April, when the company announced details of its plans regarding the divestitures, kicking it off with the sale of its Real Estate business assets to Wells Fargo & Co. (NYSE:WFC) and Blackstone Group LP (NYSE:BX), for $26.5 billion.

Following the news of the interest from Element Financial, General Electric stock traded up 0.22%, outperforming the broader equity market during yesterday's trade. The benchmark S&P500 Index closed flat on Friday, having lost a mere 0.03%.

Source: General Electric Company Fleet Management Business Receives Interest From Element Financial