Sunday, March 18, 2007

GE expands fleet management General Electric and the Blackstone Group announced a deal this week to buy US company PHH for $1.8 billion. Essentially, GE will buy the company, and sell off the home mortgage division to the private equity group for an unnamed price. What GE will get is the PHH Arval division, the #2 North American corporate fleet management services company, which works with a third of Fortune 500 firms as clients, with over 3000,000 leased vehicles in its fleet. This fits in nicely with GE's business-to-business financing, leasing, and asset-management division. GE already has the #1 US fleet-management business. Once again, a merger of #1 and #2, and no-one is talking antitrust. Blackstone will get a residential mortgage division relatively untouched by the woes pf the subprime business. PHH Mortgage finances high-end mortgages sold through investment companies like TD Banknorth, Charles Schwab, and Merrill Lynch. Blackstone, as a BusinessWeek article ("No Fear for Blackstone in PHH Deal", 3/15/07) puts it "he latest example of a large investor seeing promise amid the recent declines of high-risk mortgage lending." PHH has an interesting history. It is one of the divisions spun off from the Cendant conglomerate in 2005, which had bought the company in 1977. Note that there is also an independent UK company, Arval PHH, owned by French bank BNP Paribas. The US PHH has worked closely with its European namesake to support multinationals corporations. 3:30:09 PM

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