General Electric has revealed that it has disposed of its remaining stake in a truck leasing firm, Penske Truck Leasing. The 15.5% stake was sold to a Mitsui subsidiary, MBK USA Commercial Vehicles, and Penske Automotive Group. MBK bought 65% of GE’s remaining stake while Penske Automotive Group acquired 35%. General Electric earned around $674 million from the sale.
“This is one of the last pieces of our former GE Capital businesses. To date, we have sold more than $201 billion in assets as we refocus GE Capital on financing businesses directly related to GE’s industrial businesses,” said the chairman and chief executive officer of GE Capital, Rich Laxer.
Penske Truck Leasing was founded close to three decades ago as a joint venture bringing together GE Capital and Penske Corp. At the height of its success about two decades ago, GE Capital was indisputably one of the biggest banks in the United States. But after the Great Recession GE Capital has been engaged in efforts to scale down the financial services business. Two years ago GE Capital disclosed that it would be quitting banking.
Currently GE Capital consists of energy-finance, industrial-finance and aviation-finance businesses. According to Laxer, the efforts of refocusing GE Capital towards financing businesses which are directly related to the industrial business of General Electric have seen the firm dispose of assets worth over $201 billion.
GE Capital refocusing efforts comes in the wake of Wall Street firm JPMorgan continued to give an underweight rating to the stock of General Electric on the grounds that business trends and earnings continue to deteriorate. According to JPMorgan the free cash flow of the conglomerate is weak and its valuation expensive and there is little chance for that to change. Specifically, the power business of the conglomerate is suffering from poor fundamentals while GE’s oil and gas segment has only enjoyed a meager turnaround. Consequently the top Wall Street company sees a downside risk for the stock.
Three months ago the conglomerate’s long-serving chief executive officer, Jeff Immelt, left and John Flannery was named as his successor in a management shake-up that had been long-awaited. But despite the change in leadership the shares of General Electric continued to underperform compared to the rest of the market. So far in this calendar year, shares of the conglomerate have fallen by 21% compared to an increase of 10% for the S&P 500.