GE to buy Deutsche Bank's U.S. leasing unit for $2.9 billion

September 17, 2002|By BLOOMBERG NEWS

FAIRFIELD, Conn. - General Electric Co. agreed yesterday to buy Deutsche Bank AG's U.S. leasing unit for about $2.9 billion in cash and assumed debt, its second takeover of a European-owned financing business this month.

Deutsche Financial Services provides financing of office equipment, industrial machines and recreational vehicles for more than 1,000 manufacturers and about 14,000 companies. It has 1,200 workers and receivables of $2.7 billion, it said in a statement.

GE Chief Executive Officer Jeffrey Immelt has been expanding in Europe. He agreed Sept. 4 to buy the finance unit of Switzerland's ABB Ltd. for $2.3 billion. In July, he split his GE Capital finance unit into four to eliminate a layer of management as he reshapes the world's biggest nonbank financial company.

"Acquisitions are the only way for GE to keep up its growth rate," said Olgerd Eichler, who helps manage about $600 million in U.S. stocks at Union Investment in Frankfurt, which holds shares of General Electric and Deutsche Bank.

Deutsche Bank, by contrast, has been selling off businesses as part of a plan to boost earnings after they fell to their lowest in a decade last year. GE Commercial Finance, one of four divisions created by the breakup of GE Capital, expects to complete the purchase of Deutsche Bank's St. Louis-based unit in the fourth quarter. The German bank's U.S. prefabricated-homes and consumer-financing businesses aren't part of the transaction.

Deutsche Bank's shares slipped 49 cents to 59.05 euros in Frankfurt.

Deutsche Bank's profit, excluding tax and accounting changes, plunged 67 percent last year to 1.4 billion euros ($1.4 billion) as costs for potential loan defaults doubled and Europe's biggest lender wrote down investments

This year's earnings may be even worse. In the second quarter, net income dropped 76 percent.

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