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Fleet buys Sanwa U.S unit
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November 23, 1998: 8:42 a.m. ET
Financial services firm said to pay $750M, assume $5B in debt
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NEW YORK (CNNfn) - Fleet Financial Group, the nation's sixth-largest commercial lender, agreed Monday to buy Sanwa Business Credit, the U.S. commercial finance operations of Japan's Sanwa Bank.
Terms of the deal were not disclosed, but industry sources on Friday valued the transaction at roughly $750 million in cash, plus the assumption of $5 billion in debt.
Boston-based Fleet expects the acquisition of Sanwa's Chicago operations to be immediately accretive to earnings per share. Together, the companies will have assets of about $16 billion.
"This acquisition is consistent with Fleet's strategies of building on our existing strengths, acquiring high growth businesses, and broadening our geographic reach," said company President and Chief Operating Officer Robert J. Higgins. "Fleet has a very strong record in the leasing and asset-based lending businesses."
The acquisition of Sanwa's business credit operations, he added, will broaden Fleet's geographic reach and fill gaps in its product lines, including lease financing for manufacturers of capital equipment and leasing programs for small businesses.
Of the roughly six firms interested in buying Sanwa Business Credit, Fleet's offer was deemed the best, one industry source said. According to published reports, the Japanese bank was seeking a much higher price -- $1.2 billion to $2 billion -- for the unit.
Japanese banks are contending with bad loans amid the country's worst recession in 50 years, and many are pulling out of the United States to bring capital home.
Meanwhile, U.S. financial firms are slowly starting to hunt for cheap assets in Japan as they seek to set up shop there.
Two weeks ago, a unit of Fleet Financial Group agreed to acquire Merrill Lynch's specialist trading operation.
Under terms of the acquisition, Boston-based Fleet's JJC Specialist agreed to pay $150 million for Merrill Lynch Specialists Inc., effectively ending Merrill's presence in a specialist stock arena that the firm never considered vital to its operations.
Shares of Fleet (FLT) finished up 1-3/8 at 43-5/16 Friday on the New York Stock Exchange.
--from staff and wire reports
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