Monday, General Electric Co. (GE), a diversified industrial conglomerate, said it has signed definitive agreement with Spanish banking giant Banco Santander, S.A. (STD) for the exchange of certain European businesses. The transactions are each valued at about 1 billion euros, or $1.55 billion. The Fairfield, Connecticut-based General Electric reached the deal through its GE Money and Commercial Finance businesses.
The agreement was signed on March 27 as non-binding, under which Banco Santander agreed to takeover GE Money's businesses in Germany, Finland and Austria, and its British card and auto businesses. Now, the agreement signed on Monday also includes GE Money's card business in Ireland.
Meanwhile, GE Commercial Finance will acquire Interbanca, the Italian commercial bank assigned to Banco Santander as part of the distribution of assets following the 70 billion euros acquisition of ABN Amro Holding N.V., along with Royal Bank of Scotland (RBS-PP, RBS-PR, RBS-PL, RBS.L) and Belgian-Dutch financial group Fortis.
The Madrid-based Banco Santander will incorporate the acquired GE Money units, which have total assets of 9 billion euros, into its Consumer Finance and Cards divisions. On the other hand, Interbanca would become part of GE Commercial Finance, thus helping GE reach out to the mid-market banking businesses in Italy.
Subject to the receipt of certain regulatory approvals, the companies expect the deal to close early in the fourth quarter.
The transaction with GE will enable Banco Santander to continue consolidating Santander Consumer Finance as one of the industry's leaders in Europe.
For GE, the deal will help in reducing its exposure to some of the more volatile areas of the finance industry, including mortgage lending. GE has also put its U.S. private label credit card and Japanese consumer lending units on the block. Recently, GE agreed to sell GE Money's commercial card and corporate purchasing business unit Corporate Payment Services to American Express Co. (AXP) for $1.1 billion in cash.
GE Money, headquartered in London, offers a range of financial products, including private label credit cards, personal loans, bank cards, auto loans and leases, mortgages, corporate travel and purchasing cards, debt consolidation and home equity loans, and credit insurance. GE Money has more than $200 billion in assets, with in excess of 130 million global customers in 55 countries.
Meanwhile, GE Commercial Finance, which offers businesses around the globe an array of financial products and services, has assets of over $300 billion and is headquartered in Norwalk, Connecticut.
On NYSE, shares of GE closed Friday' regular trading session at $30.72, while Banco Santander stock ended Friday's trading at $20.90.
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