General Electric Co. said on Friday it would launch a $1.14 billion takeover 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 big stake in Sanyo Credit a little over a year ago from struggling electronics maker Sanyo Electric Co.
GE is already a major player in Japan'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.
"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.
GE said it would pay 3,250 yen per share in a tender offer, a premium of nearly 62 percent from Sanyo Credit's closing price of 2,010 yen in Tokyo on Friday.
The U.S. 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 percent stake in Sanyo Electric Credit, but it has since sold down its holding to 33.2 percent.
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 percent 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.
GE said earlier this month it would close 60 percent of its Lake branches and shed up to 400 employees.
Osaka-based Sanyo Electric Credit expects a net profit of 7.9 billion yen in the year to March, a turnaround from its 9.9 billion yen loss in the previous year.
The company gets about 60 percent of its sales from leasing computers and other equipment mainly to businesses. It gets about 30 percent from lending to businesses and the remaining 10 percent from consumer credit.
Mitsubishi UFJ Securities will handle the deal.
(Additional reporting by Taro Fuse and Sachi Izumi)
