GE will sell its tank car fleet assets and railcar repair facilities to Marmon Holdings and its remaining railcar leasing business, General Electric Railcar Services, to Wells Fargo for an undisclosed amount.
The sale of the tank car assets is effective immediately and closed today. The sale of the railcar repair facilities is expected to close in the fourth quarter of 2015. The sale of the remaining railcar leasing business is subject to customary regulatory and other approvals and is expected to close by the end of the first quarter of 2016.
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When completed, the rail transactions, which represent about $4.0 billion of ending net investment, will contribute approximately $1.3 billion of capital to the overall target of approximately $35 billion of dividends GE it expected to receive.
"These transactions are another example of the value generated by GE Capital’s strong businesses and exceptional teams as we continue to demonstrate speed and execute on our strategy to sell most of the assets of GE Capital," said Keith Sherin, GE Capital chairman and CEO. "We expect to be substantially done with our exit strategy by the end of 2016," he added.
GE Railcar Services leases a broad range of railcars as well as locomotives to shippers and railroads across North America.
"We’re pleased to sell our railcar business and, separately, our tank car fleet and railcar repair shops, to buyers that are long-term players in the industry committed to expanding the businesses," said Sherin.
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By GlobalDataDeutsche Bank Securities provided financial advice to GE and Weil, Gotshal & Manges provided legal advice.
GE is embarking on a strategy to focus on its high-value industrial businesses and is selling most GE Capital assets. GE and its board of directors have determined that market conditions are favorable to pursue disposition of these assets. GE Capital will retain the financing "verticals" that relate to GE’s industrial businesses.
