Merrill Lynch (MER) was last up 3.3% to $57.35 in thin pre-market activity following news the company will sell Merrill Lynch Capital, its commercial finance division to GE Capital, a subsidiary of General Electric (NYSE:GE). Financial terms of the transaction were not disclosed, but the deal is expected to close in Q1-2008. GE Capital will add more than $10B in assets and $5B in commitments to its base of $260B. Merrill Lynch Capital's corporate finance, equipment finance, franchise, energy and healthcare finance units are included in the acquisition, but its commercial real estate finance unit is not. Recently appointed Merrill Lynch CEO John Thain commented, "This transaction reflects Merrill Lynch’s continued strategic focus on divesting non-core assets and optimizing capital allocation, while also enabling the redeployment of approximately $1.3 billion of capital into other parts of our business."
Separately, The Wall Street Journal reports Merrill is close to finalizing talks with Singapore's government investment arm Temasek Holdings for a much needed $4.4B capital investment equating to just under a 10% stake in the firm. The Journal broke news of Merrill-Temasek talks on Friday (full story). Shares of Merrill Lynch gained 1.9% to $55.54 on Friday. GE rose 1.7% to $37.14 and was last up 0.35% to $37.27 in the pre-market.
Additional Reading: SEC Probes Wall Street on Mortgage-Related Asset Pricing • Eight Preferred Stocks With Attractive Yields - Barron's • GE's Earnings to Grow At Least 10% in 2008 - Immelt