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PHH Sells Fleet Management Unit for $1.4B

June 02, 2014

Photo courtesy of PHH Arval.
Photo courtesy of PHH Arval.

PHH Corp. has agreed to sell its fleet management unit, PHH Arval, to Element Financial Corp. for $1.4 billion in cash in a deal that had been in the works since February.

The eventual sale price came in significantly higher than early valuation estimates. In late February, an equity analyst pinned PHH Arval's value at $650 million at 1.5 times the company's book value.

Glen Messina, president and chief executive of PHH, said the sale came after careful consideration.

"This transaction best positions our fleet and mortgage businesses to capitalize on their distinct strategic opportunities while maximizing value for our shareholders," Messina said in a statement. "We are pleased to have reached an agreement with Element, which has a strong commitment to the fleet management industry and to delivering the outstanding customer service PHH Arval customers have come to expect."

As part of the sale, Element Financial will acquire $4.6 billion in total assets, including PHH Arval's office in Sparks, Md., the Toronto-based fleet management company said. The acquisition will help Element further its global expansion plans, said Steven Hudson, Element's chairman and chief executive.

"This transformative acquisition achieves all of the strategic and financial objectives that we established when we set out to expand our domestic fleet management business into the U.S. market," Hudson said in a statement. "It provides us with a fully integrated North American fleet management offering that complements our other three business verticals at the same time that it is accretive to our shareholders and immediately improves our capital efficiency."

The deal is structured as a stock-for-cash transaction, and will be treated as an asset sale for tax purposes. PHH stock closed at $25.25 per share on June 2, and rose in after-hours trading.

PHH is expected to record an after-tax gain of up to $300 million, and net proceeds after taxes and transaction expenses should come in around $800 million, according to PHH.

The sale is expected to close before July 31.


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  1. 1. Martin Piling [ June 05, 2014 @ 07:30AM ]

    Will the Company still be called PHH or Element? If not the end of a great name in US fleet management.



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