General Electric Co.'s (GE) financial services arm talked with
Dell Inc. (DELL) recently about buying the computer maker's
financing unit, though the talks didn't lead to a deal, according
to people with knowledge of the discussions.
The talks were separate from talks GE has been having with
Blackstone Group LP (BX), the private-equity firm that is proposing
to take control of Dell, the people said. As part of that plan,
Blackstone is considering selling all or part of Dell's finance
business. People familiar with those talks have said GE would be
the most likely buyer.
Blackstone's plan for Dell would compete with an offer by Dell
Chief Executive Michael Dell and private-equity firm Silver Lake
Partners, valued at $13.65 a share. Blackstone offered at least
$14.25 a share, while allowing shareholders to retain some of their
stock. Activist investor Carl Icahn has also weighed in with an
expression of interest in the Round Rock, Texas, company.
Dell's finance arm makes money and selling the unit means
forgoing future profit. But the unit, valued at around $5 billion,
could help offset the amount of debt needed to take control of
Dell.
Dell's financing business offers loans to corporate customers
and individual consumers, as well as extending leases to
businesses, to buy products made by Dell and sometimes other
companies. Dell Financial Services, as the business is called,
originated $3.5 billion in new financing during the company's
fiscal year ended Feb. 1, according to a securities filing. That's
down from $3.8 billion in the year-earlier period, the filing
said.
GE has been shrinking GE Capital by selling off noncore assets
like commercial property in the U.S. and bank stakes in Thailand.
But the company continues to invest in businesses including lending
and leasing to companies, consumer financing, and private-label
credit cards.
--Matt Wirz contributed to this article.
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