DANBURY, CT —GE Capital Solutions has entered into a definitive agreement to acquire PHH Corp. in an all cash transaction valued at approximately $1.8 billion. PHH Corp. is comprised of the fleet management company PHH Arval and PHH Mortgage, a retail originator and servicer of residential mortgages in the U.S.

In conjunction with this transaction, GE has entered into an agreement to sell PHH Mortgage to an affiliate of The Blackstone Group, a global private investment and advisory firm, immediately after closing.

GE Capital Solutions will retain PHH Arval and absorb it into its leasing, financing and asset management business. PHH Arval has approximately $5 billion in assets.

"We believe the integrated financing and services we offer can help customers optimize fleet performance by helping them acquire, manage and sell company vehicles," said Richard Laxer, president and CEO, GE Capital Solutions. "Combining with PHH will enable us to provide our customers with a greater level of service to meet their growing needs and challenges."

On the unanimous recommendation of a special committee of the Board of Directors, which comprises all of the independent directors, the Board of Directors of PHH Corp. unanimously approved the merger and recommended its approval by stockholders. A special meeting of stockholders to approve the transaction will be scheduled at a later date. Under the terms of the merger agreement, PHH stockholders would receive $31.50 per share in cash at closing, representing a premium of 13.3% over the PHH stock closing price on the NYSE of $27.81 on March 14, 2007.

"The fleet management industry is changing rapidly, and issues such as the environment, safety, telematics, global reach and continued cost effectiveness are increasingly important," said George J. Kilroy, president and CEO of PHH Arval. "PHH Arval and GE together can bring the focus needed for these opportunities to expand the impact of fleet management and create measurable value for our customers."

"Our businesses share a common commitment to customer service, innovation and using technology to maximize the value of our customers' fleets. The combination of our businesses will allow us to better serve our customers in achieving their sales, service and delivery performance goals," added Bob Mitchell, president and CEO of GE Capital Solutions, Fleet Services.

A. B. Krongard, non-executive chairman of the board of PHH Corporation, commented, “Since PHH became an independent public company on February 1, 2005, the Board has periodically examined various alternatives in order to serve the interests of the Company’s clients, employees and stockholders. After careful consideration we believe this transaction best addresses those interests. It will enable stockholders to realize the fundamental value of both businesses.”

The transaction is subject to approval by PHH Corporation’s stockholders, antitrust, state licensing, and other regulatory approvals, as well as various other closing conditions. Following the closing of the transaction, shares of PHH common stock will no longer be listed on the New York Stock Exchange.

The acquisition, subject to PHH shareholder and regulatory approvals and other closing conditions, is expected to close in the third quarter of 2007.

PHH Corporation was spun from Cendant in early 2005.

0 Comments