Spain's Grupo Santander agreed to purchase a $2 billion mortgage portfolio of Mexican real-estate assets from General Electric Co.'s finance division for $162 million plus the assumption of debt.
The deal, expected to close next year, involves Grupo Financiero Santander Mexico acquiring all of GE's consumer-mortgage business in Mexico, including its $2 billion consumer-mortgage portfolio.
The sale fits with GE Capital's strategy "to exit non-strategic businesses that lack scale to help reduce GE Capital's balance sheet while investing in core industrial" and other businesses said Mark Begor, president and chief executive of GE Capital's restructuring operations.
More
Document: GE announces deal
Santander said the deal will make its Mexican operations "the second leading provider of mortgages" in Mexico, according to Marcos Martinez Gavica, executive vice president of Grupo Financiero Santander. Santander Mexico already has a network of retail branches and the acquisition is aimed to help it grow its mortgage business.
GE Capital, which made a series of bad investment decisions leading up to the financial crisis, has been an active player in Mexico in recent years, dabbling in both commercial and residential real estate, as well as commercial leasing and lending.
One of GE Capital's Mexican initiatives was what it called a "Mexican Dream Mortgage" that hoped to sell Mexican retirement properties to U.S. baby boomers. In 2006, GE saw this as "a multibillion-dollar market" that could bring hundreds of millions to GE Capital, according to Michael Dodge, then a senior vice president of GE Money's WMC Mortgage Corp. division.
As the subprime-housing market began to implode, GE sold off its WMC division and recorded a $1 billion loss. The company has faced ongoing losses in its commercial real-estate and European mortgages divisions during the past two years. The mortgages it is selling to Santander are considered "prime" properties, according to a person familiar with the matter.
Earlier this month, GE Capital executives said it disposed of $14 billion worth of financial stakes and assets in 2010 and plans to dispose of another $17 billion in 2011 as the company aims to shrink its balance sheet. The goal is to expand its industrial business and shrink its financial division, so GE Capital would provide 30% of the company's earnings rather than 50%.
"There's some well-known pieces of GE Capital that will be disposition candidates or run-off candidates," said Jeff Immelt, GE's Chairman and chief executive, at an investor meeting this month.
GE shares are up 19% this year, though have declined 56% since Mr. Immelt took the CEO post in September 2001. Santander shares, meanwhile, have lost 35% of their value during 2010.
Write to Paul Glader at paul.glader@wsj.com and Bob Sechler at bob.sechler@dowjones.com
Aucun commentaire:
Enregistrer un commentaire