MOUNT LAUREL, N.J.
- PHH Corp. announced Jan. 1 that it terminated its $1.8 billion merger agreement with General Electric Capital Corp. (GECC) because The Blackstone Group, a private equity company, could not obtain financing to acquire PHH’s mortgage business.
General Electric Capital and Blackstone agreed March 15, 2007 to acquire PHH Corp., headquartered in Mount Laurel, N.J.
The agreement required that immediately following the closing of the merger, GECC would sell PHH’s mortgage business to Pearl Mortgage Acquisition 2 L.L.C., an affiliate of The Blackstone Group. The acquisition was thrown into doubt on Sept. 17, when Blackstone said it might have a financing shortfall of up to $750 million amid a recent tightening in credit markets.
PHH said Jan. 1 it called off the sale because it had not been completed by Dec. 31, as stipulated by the agreement. Also, PHH said it is seeking a $50 million termination fee from Blackstone.
“I am disappointed that we could not conclude the transactions contemplated by the merger agreement," PHH Chairman A.B. Krongard said in a statement. “The board will determine in due course whether to continue to explore the company's strategic alternatives. The board remains focused and committed to delivering value for our stockholders regardless of the decision.”
PHH Mortgage, which formerly did business as Cendant Mortgage, is among the top 10 originators of residential mortgage loans in the U.S.
PHH Arval, the fleet management business unit, accounts for more than two-thirds of company sales and is the No. 2 provider of services for managing commercial fleets in the United States and Canada, according to Business Week.