BMO to buy GE transport finance business

• Bank of Montreal is acquiring GE Capital’s transportation finance business in the United States, the largest financier to the commercial truck and trailer segment in North America, with net earning assets of $11.5 billion at the end of June.

The purchase price will be based on the net earning assets balance at closing, plus a premium, which is expected to total close to $13 billion, analysts were told on a late afternoon conference call. “The… assets we are acquiring have many of the characteristics of other business segments in which BMO has proven capability,” said Bill Downe, BMO CEO.

“This represents a unique opportunity to grow our commercial customer base.”

The deal, scheduled to close in the first quarter, will add immediately to BMO’s earnings, Downe said on the conference call with analysts.

GE has been reducing the size of its financial business through the sale of most of the assets of its GE Capital unit. In June, the Canada Pension Plan Investment Board struck a $12-billion deal to acquire Antares Capital, a portfolio of GE Capital.

The transportation finance business BMO is buying is based in Irving, Tex. It operates out of 11 locations in the U.S. and four in Canada, and has about 600 employees.

BMO executives said they expect GE Capital’s management team to remain with the business. “We’re acquiring an excellent organization, one that is operated by the premier management team in the transportation finance industry,” said David Casper, head of BMO Harris Bank.

A Toronto-based analyst, who spoke on condition that he would not be named, said the asset value on closing would be about $12.55 billion, with about $450 million in goodwill. “They are buying hard assets,” he said.