NEW YORK: Canadian equipment finance company Element Financial Corp is close to a deal to buy PHH Corp’s auto fleet leasing business for about $1.35bn in cash, two sources familiar with the matter said.
PHH’s net proceeds from the deal, after taxes and expenses, are expected to be around $750m, one of the sources said.
The boards of the two companies are expected to meet this weekend to approve the transaction, the terms of which are being finalised, according to the sources. A deal for the unit, PHH Arval, could be announced as soon as tomorrow, they said.
Element, which provides financing for industrial, aerospace and automotive equipment leasing, declined to comment. PHH could not immediately be reached.
PHH shares were up 0.3 percent at $25.51 while Element shares were up 1.3 percent at $13.61 on Friday afternoon.
It was reported on May 21 that PHH and Element were in exclusive negotiations for a deal. The transaction is structured to include significant tax benefits.
PHH has deferred tax liabilities — which amount to expected future tax payments — linked to the fleet business of $798m as of December 31, 2013, according to KBW analysts. Reuters
