We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
CIT Group to Sell Canadian Business, Aims at Domestic Market
Read MoreHide Full Article
As part of its strategy to focus on domestic operations, CIT Group Inc. announced a definitive agreement to sell its Canadian equipment finance and corporate finance businesses to the Laurentian Bank of Canada, a Montreal-based lender. The divestiture, which is scheduled to close in the fourth quarter of 2016, is subject to customary closing conditions.
Notably, the terms of the deal were not disclosed. However, CIT Canada has portfolio under management worth $700 million (C$1 billion), which is expected to be financed by the Laurentian Bank of Canada through $135 million offering of subscription receipts and existing balance sheet liquidity.
Rationale Behind the Deal
CIT Group has come a long way since its emergence from bankruptcy in 2009. Amidst the current dynamic and challenging operating environment, the company has been restructuring its operations. Apart from re-organizing its segments, the company is making significant progress toward pruning its non-strategic portfolios.
Over the past several quarters, the company divested its businesses in Brazil and Mexico, completed the disposition of the U.K. Equipment Finance platform and initiated the sales process for businesses in Canada and China. Further, the company is on track to become a regional commercial banking institution.
Impact of the Deal
The purchase of CIT Canada will marginally boost Laurentian Bank’s earnings in 2017, while the same will increase nearly 4% in 2018. Also, on closure of the deal, about 140 employees of CIT Canada will join the bank in a new subsidiary, which will be known as ‘LBC Capital’.
In an effort to pursue its strategic turnaround plan to focus on its core commercial franchises and exit the international businesses, CIT Group sold its Canadian business.
Additionally, to continue pursuing the dual track process to separate its commercial aircraft leasing business, CIT Group filed an initial Form 10 Registration statement with the U.S. Securities and Exchange Commission. Both the tracks are progressing and the separation is expected to be completed by the end of this year.
However, any contemplated transaction will be subject to certain conditions, including the receipt of any required approvals by the applicable regulators, legal opinions from the counsel and final approval by CIT Group’s Board of Directors.
The announcement of the deal and the rise in stock prices due to the current global equity market scenario, led to a rise in the share price of the company, which had been on a decline over the past year.
Currently, CIT Group holds a Zacks Rank #4 (Sell).
Some better-ranked stocks in the same industry include Euronet Worldwide Inc. (EEFT - Free Report) and ORIX Corporation (IX - Free Report) , both holding a Zacks Rank #2 (Buy) and Blackhawk Network Holdings Inc. , carrying a Zacks Rank #3 (Hold).
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report >>
See More Zacks Research for These Tickers
Normally $25 each - click below to receive one report FREE:
Image: Bigstock
CIT Group to Sell Canadian Business, Aims at Domestic Market
As part of its strategy to focus on domestic operations, CIT Group Inc. announced a definitive agreement to sell its Canadian equipment finance and corporate finance businesses to the Laurentian Bank of Canada, a Montreal-based lender. The divestiture, which is scheduled to close in the fourth quarter of 2016, is subject to customary closing conditions.
Notably, the terms of the deal were not disclosed. However, CIT Canada has portfolio under management worth $700 million (C$1 billion), which is expected to be financed by the Laurentian Bank of Canada through $135 million offering of subscription receipts and existing balance sheet liquidity.
Rationale Behind the Deal
CIT Group has come a long way since its emergence from bankruptcy in 2009. Amidst the current dynamic and challenging operating environment, the company has been restructuring its operations. Apart from re-organizing its segments, the company is making significant progress toward pruning its non-strategic portfolios.
Over the past several quarters, the company divested its businesses in Brazil and Mexico, completed the disposition of the U.K. Equipment Finance platform and initiated the sales process for businesses in Canada and China. Further, the company is on track to become a regional commercial banking institution.
Impact of the Deal
The purchase of CIT Canada will marginally boost Laurentian Bank’s earnings in 2017, while the same will increase nearly 4% in 2018. Also, on closure of the deal, about 140 employees of CIT Canada will join the bank in a new subsidiary, which will be known as ‘LBC Capital’.
In an effort to pursue its strategic turnaround plan to focus on its core commercial franchises and exit the international businesses, CIT Group sold its Canadian business.
Additionally, to continue pursuing the dual track process to separate its commercial aircraft leasing business, CIT Group filed an initial Form 10 Registration statement with the U.S. Securities and Exchange Commission. Both the tracks are progressing and the separation is expected to be completed by the end of this year.
However, any contemplated transaction will be subject to certain conditions, including the receipt of any required approvals by the applicable regulators, legal opinions from the counsel and final approval by CIT Group’s Board of Directors.
The announcement of the deal and the rise in stock prices due to the current global equity market scenario, led to a rise in the share price of the company, which had been on a decline over the past year.
Currently, CIT Group holds a Zacks Rank #4 (Sell).
Some better-ranked stocks in the same industry include Euronet Worldwide Inc. (EEFT - Free Report) and ORIX Corporation (IX - Free Report) , both holding a Zacks Rank #2 (Buy) and Blackhawk Network Holdings Inc. , carrying a Zacks Rank #3 (Hold).
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report >>