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.