Bank Of N.Y. Co. to Sell Factoring and Asset-Based Lending Business to GMAC for $1.8 Billion
8 June 1999
New Stock Buyback Program Part of Deal
Sale Accelerates The Bank of New York's Strategic Thrust to Emphasize Higher
Growth Fee-Based Business Lines
NEW YORK, June 8 -- The Bank of New York Company, Inc.
, announced today the signing of a definitive agreement to sell BNY
Financial Corporation (BNYFC), its factoring and asset-based lending business,
to General Motors Acceptance Corporation (GMAC), a wholly owned subsidiary of
General Motors Corporation , for $1.8 billion in cash. The sale
will also include related Canadian and UK factoring and asset-based
operations. The Bank estimates a pre-tax gain of approximately $1.05 billion
from this transaction, on a preliminary basis.
The Bank of New York, General Motors Corporation and GMAC Boards of
Directors have approved the transaction and all due diligence has been
completed. The transaction is targeted to close by the end of the second
quarter, and is subject to customary regulatory approvals.
At the same time, The Bank of New York Company, Inc. announced that its
Board of Directors has approved, upon successful completion of the sale of
BNYFC, a plan under which the Company will buy back 30 million of its common
shares. The Company has repurchased substantially all of the 18 million
shares authorized under the buyback program announced in December 1998.
Thomas A. Renyi, chairman and chief executive officer of The Bank of New
York Company, Inc., said, "This transaction further advances our overall
strategy, which is to focus on our higher growth fee-based activities,
including securities servicing, cash processing and fiduciary services. While
the sale would have a slightly dilutive pro forma effect on earnings of 2% to
3% for the full year 1999, the increased concentration on our fee-based
businesses will enhance our overall earnings growth.
"We are pleased to have found in GMAC, a buyer who has an acknowledged
strategic interest in this business and who not only recognizes the value of
the franchise, but the staff which developed that value," concluded Mr. Renyi.
BNY Financial Corporation, together with its affiliates, is the leading
provider of factoring and asset-based lending services in the United States,
Canada and the United Kingdom. It supports middle market businesses with
annual sales of $5 million and above.
GMAC, a wholly owned subsidiary of General Motors Corporation, is one of
the world's largest financial services companies with business lines in
automotive finance, commercial and residential mortgages, and insurance. At
March 31, 1999, GMAC's owned assets and serviced automobile receivables
exceeded $140 billion and combined service assets of the GMAC Mortgage Group
exceeded $250 billion. More information on GMAC Financial Services is
available at http://www.gmacfs.com.
The information presented with respect to earnings growth and the
Company's plans and objectives in moving toward fee-based business is
forward-looking information. As such, it is subject to risks and
uncertainties that could cause actual results to differ materially from the
projected results discussed above. These uncertainties include market changes
that differ from the Company's market forecasts and the actions that
management could take in response to these changes. For further information
see discussion of forward-looking statements appearing in the Company's Annual
Report on Form 10-K under the heading "Forward-Looking Statements."
The Bank of New York Company, Inc., is one of the largest bank holding
companies in the United States, with total assets of over $64 billion as of
March 31, 1999. The Company provides a complete range of banking and other
financial services to corporations and individuals worldwide through its basic
businesses: Securities Servicing and Cash Processing; Corporate Banking;
Trust, Investment Management and Private Banking; Retail Banking; and
Financial Market Services. Additional information on the Company is available
at http://www.bankofny.com.