General Electric said on Friday it would launch a $1.14-billion
takeover bid for leasing firm Sanyo Electric Credit to further expand
into Japanâ€™s $68-billion leasing market.
The deal will also lead to a windfall gain for top shareholder Goldman Sachs Group, which bought a big stake in Sanyo Credit a little over a year ago from struggling electronics maker Sanyo Electric.
GE is a major player in Japanâ€™s leasing market, serving mainly large companies. The acquisition would help it expand its customer base because Sanyo Electric Credit focuses on small and mid-sized firms.
â€œThis should be a good fit for GE. There is no real customer overlap,â€ said Shiro Yoshioka, an analyst who covers the leasing industry at Mizuho Securities.
GE said it would pay 3,250 yen per share in a tender offer, a premium of nearly 62% from Sanyo Creditâ€™s closing price of 2,010 yen in Tokyo on Friday.
The US financial and manufacturing conglomerate said it would aim to buy 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. Goldman Sachs spent about 33 billion yen over a year ago to take a 42% stake in Sanyo Electric Credit, but it has since sold down its holding to 33.2%.
Goldman will be able to sell its stake for about 43 billion yen through the tender offer, likely netting it a windfall profit of about 17 billion yen, based on its original acquisition price of around 2,000 yen a share. Sanyo Electric spokesman Masatsugu Uemura said the company had not yet decided whether to sell its 16.7% stake in Sanyo Credit.
In addition to its leasing business, GE also operates a consumer finance arm in Japan under the Brand Name Lake. However, tighter government regulations have forced cutbacks in that industry.
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