GE Confirms Merrill Lynch Capital Acquisition

GE Capital has agreed to purchase most of Merrill Lynch Capital, the wholly owned middle-market commercial finance business of investment bank Merrill Lynch & Co. Under the transaction, GE Capital will acquire Merrill Lynch Capital's corporate finance, equipment finance, franchise, energy and healthcare finance units, but will not buy the commercial real estate finance unit. The deal is expected to close in the first quarter of fiscal year 2008. Financial terms of the deal were not disclosed.

Merrill Lynch, which is expected to incur huge write-downs on subprime mortgage-related securities in the fourth quarter, noted that the sale would enable it to redeploy $1.3 billion of capital into other parts of its business. GE Capital said that the acquisition would add more than $10 billion in assets and $5 billion in commitments to GE Capital Commercial Finance's base of $260 billion. Commenting on the deal, Mike Neal, vice chairman of GE said, "These strong units fit perfectly with existing and very successful GE Capital businesses. They are in industries we know well, so the potential for growth is compelling. In addition, this timely acquisition will expand our reach, and expand the value we can offer customers." "This transaction reflects Merrill Lynch's continued strategic focus on divesting non-core assets and optimizing capital allocation, while also enabling the redeployment of approximately $1.3 billion of capital into other parts of our business," added John Thain, chairman and CEO of Merrill Lynch.

Formed in early 2002, Merrill Lynch Capital is a broad-based commercial finance business covering corporate finance, equipment finance, real estate finance and healthcare finance. The equipment finance unit was ranked No.40 in this year's Monitor 100 survey with year-end 2006 assets of $1.6 billion. In the ABF Journal's 2007 spring survey, Merrill Lynch's asset-based lending unit reported total 2006 fundings of $1.9 billion from $3.0 billion in managed commitments.

Credit Quality in a Freefall

Credit quality deteriorated steeply from mid-October to mid-November despite the recent actions by the Federal Reserve to stimulate credit markets, CFO reports.

As of Nov. 15, $36.2 billion worth of debt was in distressed issues, more than four times the $8.6 billion reported a month earlier, according to Standard & Poor's. Distressed debt as a percentage of total debt recorded its largest monthly increase in five years, more than doubling to 4.9% from 2.3 percent. The ratio was as low as 2.1% 12 months ago.

Read this story in its entirety at CFO.com.

Health Care VC Funding In 2007 Set To Surpass 2006

Venture Capital Keeps Flowing Into Health Care, Shows No Signs Of Slowing

Venture capital firms invested $686.5 million in 34 privately held health care companies during October 2007, including 16 investments in biotechnology, eight in medical devices, five in biopharmaceuticals, three in pharmaceuticals and two in health care services. According to some sources, at least another $70 million was invested in other health care companies, and undisclosed amounts were invested in some others, but no confirmation of those deals had been received by press time.


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