According to Reuters, credit card lender Capital One Financial Corporation COF is in exclusive talks to purchase the healthcare finance unit of General Electric Company GE, in a deal likely to cross $10 billion.
The reports come six weeks after Bloomberg reported that Capital One, Apollo Global Management, LLC APO and a myriad of other firms were bidding for GE's U.S. healthcare lending unit. However, the deal is still in the negotiation stage and nothing has been finalized yet. If the deal is struck, it could build up Capital One's healthcare lending operations.
The healthcare finance business in question provides mortgages and loans to healthcare companies as well as real estate loans to operators of assisted nursing homes, living facilities and medical practices. The unit is a part of GE’s $200 billion asset offloading program spearheaded by CEO Jeff Immelt, as the conglomerate strives to return to its industrial roots and shrinking its financial arm.
In late June, GE announced an agreement to sell its European private equity financing unit to Japan's Sumitomo Mitsui Banking Corporation for about $2.2 billion. Before that, GE struck deals to offload real estate assets worth about $23 billion to Wells Fargo & Company WFC and Blackstone.
Ever since it revealed its milestone intentions to sell off chunks of GE Capital in April, the industry bellwether has been busy offloading holdings, including several overseas bank stakes, while at the same time attempting to expand its industrial holdings.
Immelt asserted that the low interest rates currently prevalent in the economy, coupled with abundant liquidity in the corporate market present a great climate for asset sell-off, and the conglomerate is exploiting a “window of opportunity” to sell while these conditions persist.
GE had announced that it plans to shed over four-fifths of its finance arm, drawing an end to the era when it relied on the freewheeling business’ financial engineering skills to generate half of its profits. GE even plans to negotiate with regulators about withdrawing GE Capital’s designation of a systemically important financial institution.
GE presently carries a Zacks Rank #3 (Hold).
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