U.S. Immigration focus on U.S. business immigration: According to foreign media reports, General Electric Company stated on the 11th that it plans to sell its U.S. healthcare financial services unit to Capital
One Financial Corporation for $9 billion, and will also sell approximately $600 million in real estate assets from that unit. This is the latest development in General Electric's de-financialization strategy.
The transaction will include approximately $8.5 billion in healthcare-related loans and is expected to be completed in the fourth quarter of this year. General Electric also stated on the 11th that it has agreed to sell approximately $600 million in real estate investments from the healthcare financial services unit to another buyer, but did not disclose specific information regarding the buyer.
According to a report by The Wall Street Journal, sources said the $8.5 billion price is lower than the $10 billion to $11 billion valuation when General Electric began seeking buyers for the healthcare financial services unit in June, but the lower transaction price is mainly due to the exclusion of approximately $2 billion in assets from the deal.
General Electric plans to divest approximately $100 billion in financial assets by the end of this year; including this transaction, the announced financial asset divestment plan has reached $78 billion. In April of this year, General Electric agreed to sell approximately $26 billion in real estate assets to Wells Fargo and The Blackstone Group, and subsequently sold its private loan portfolio to the Canada Pension Plan Investment Board for $12 billion. General Electric's ultimate goal is to divest a total of $200 billion in financial assets by the end of 2016, but it will retain financial units related to its industrial business operations.
General Electric's financial unit, GE Capital, has been designated as a "systemically important financial institution" by U.S. regulators for close supervision due to its massive size and the potential risks in its loan portfolio. General Electric stated that it hopes to exit the scope of "systemically important financial institutions" next year by divesting financial assets. At the same time, uncertainty in the financial market has increased risks and lowered returns, and investors are also constantly urging General Electric to return to the fundamentals of its industrial business.
Currently, the healthcare industry is showing positive momentum with active merger and acquisition activities. General Electric's healthcare financial services unit provides direct loans to healthcare product and service companies, and also provides real estate loans to some nursing facilities, medical practices, and assisted living facility operators. In 2014, General Electric's U.S. healthcare financial services unit provided approximately $10.5 billion in funding for various healthcare industry mergers, acquisitions, and financing activities. Reports last week indicated that Capital One had beaten other competitors and was in exclusive talks with General Electric regarding the acquisition.
For Capital One, this transaction will expand the scale of its healthcare lending business. Michael Slocum, President of Capital One's Commercial Banking division, said: "This transaction will place us in a leading position in the healthcare lending sector."
Capital One is currently better known for its credit card business and has recently been striving to provide more comprehensive financial services. Capital One currently holds approximately $200 billion in deposits and $310 billion in assets, making it one of the largest financial institutions in the United States.
According to data from market research firm Dealogic, this transaction is the fourth-largest merger and acquisition in the U.S. banking industry since 2008. Capital One acquired ING Direct's online banking business for $9 billion in 2011.
Following the announcement of this news on the 11th, Capital One's stock price rose significantly to $81.43 per share in U.S. after-hours trading, while General Electric's stock price rose slightly to $25.80 per share.