GE buys Merrill Lynch lending unit
Tuesday, 25 December 2007
NEW YORK, Dec 24 (Reuters): Merrill Lynch and Company Inc., bracing for billions of dollars on mortgage losses in the fourth quarter, said Monday it plans to sell most of its Chicago-based middle-market lending business to General Electric Company's commercial finance arm.
The value of the deal was not disclosed. But Merrill Lynch's new Chief Executive John Thain said the sale of most of Merrill Lynch Capital will allow the brokerage to allocate about US$1.30 billion of capital to other parts of the company.
Merrill Lynch has said it will sell assets amid huge losses on subprime mortgage securities.
The company lost $2.30 billion in the third quarter after recording an $8.40 billion write-down, mostly on subprime mortgage-related securities. Some analysts expect an even bigger write-down in the fourth quarter.
GE's acquisition of the Merrill Lynch Capital assets is expected to close in the first quarter. The deal will add more than $10 billion in assets and $5.0 billion in commitments to GE Capital Commercial Finance's base of $260 billion.
The value of the deal was not disclosed. But Merrill Lynch's new Chief Executive John Thain said the sale of most of Merrill Lynch Capital will allow the brokerage to allocate about US$1.30 billion of capital to other parts of the company.
Merrill Lynch has said it will sell assets amid huge losses on subprime mortgage securities.
The company lost $2.30 billion in the third quarter after recording an $8.40 billion write-down, mostly on subprime mortgage-related securities. Some analysts expect an even bigger write-down in the fourth quarter.
GE's acquisition of the Merrill Lynch Capital assets is expected to close in the first quarter. The deal will add more than $10 billion in assets and $5.0 billion in commitments to GE Capital Commercial Finance's base of $260 billion.