Canadian equipment finance company Element Financial Corporation has entered into a definitive agreement to acquire the assets and operations of PHH Arval, the fleet management subsidiary of US company PHH Corporation.
As reported when the story leaked earlier in the week, Element will pay approximately US$1.4bn (1.0bn) in all cash under the agreement.
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On 31 March, PHH Arval reported over $4.6bn in total assets, of which $4.0bn represented net investment in fleet leases. The combination of the two companies will leave Element with approximately $10b total assets, and gives the company a substantial beach head into the US.
Michel Beland, Element’s chief financial officer noted: "In addition, the transaction provides Element with an additional US$600 million of tax deferrals which will push out the expected time horizon for the payment of cash taxes to more than 15 years."
As part of the purchase, Element will acquire all of PHH Arval’s employees, systems, intellectual property, operations, offices, agreements and any other assets in relation to its North American business.
The deal is expected to close by the end of July 2014, subject to regulatory approval.
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