General Electric Co said on Friday it would launch a $1.14 billion take-over bid for leasing firm Sanyo Electric Credit Co to further expand into Japan's $68 billion leasing market. The deal will also lead to a windfall gain for top shareholder Goldman Sachs Group Inc.
Which bought a large stake in Sanyo Credit a little over a year ago from struggling electronics maker Sanyo Electric Co GE is a formidable player in Japan's leasing market, serving large and medium-sized companies. The acquisition would likely help it expand its customer base because Sanyo Electric Credit focuses on smaller firms.
"This should be a good fit for GE. There is no real customer overlap," said Shiro Yoshioka, an analyst who covers the leasing industry at Mizuho Securities.
The expansion of its leasing business comes about two weeks after GE announced plans to close 60 percent of its manned consumer finance branches in Japan and shed up to 400 employees amid an industrywide slump prompted by tighter regulation.
GE will pay 3,250 yen per Sanyo Electric Credit share, a premium of nearly 62 percent from Friday's closing price of 2,010 yen and valuing the company at 16 times earnings, roughly in line with rival leasing giant Orix Corp.
The US financial and manufacturing giant said it would aim to be at least two-thirds of the company for an estimated 90.14 billion yen ($764 million) but would buy all shares tendered, which could boost the deal to 135 billion yen ($1.14 billion). Sanyo Credit said it had agreed to the offer, which will run from Monday until May 9. It said that Goldman has also agreed to sell its shares.
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