EverBank Financial Corp Tuesday said it will buy GE Capital’s Business Property Lending Inc division for $2.51 billion to increase its ability to lend to small and mid-sized companies, the news reports said. This will drive up its shares 6%.
EverBank went public in the month of May and has a market value of $1.26 billion.
The bank has used acquisitions to diversify its operations and increase its assets. It has brought MetLife Inc’s warehouse finance business in February. Its latest deal includes about $2.44 billion of performing commercial loans, origination and servicing platforms and servicing rights on $3.1 billion of loans securitized by GE Capital.
Robert Clements, Ever Bank Chief Executive said, “The deal will add to both earnings per share and return on equity in the near term.”
EverBank also said it expects the deal to boost the earnings per share by low-double digits. The bank said it will pay for the deal using the existing cash, securities and undrawn funding lines, the company executive said to discuss the deal.
The combined companies will have pro-forma assets of about $16.2 billion. At March-end, EverBank had assets of $13.8 billion.
EverBank expects the business property lending to originate between $500 million and $1 billion in loans a year in the intermediate term.
The shares of Ever Bank rose 6% at $11.54 in the early trades on the New York Stock Exchange. GE Capital curtailed the lending by the division, which had once originated more than $4 billion a year in loans, post financial crisis.
So far, the division had originated $317 million in loans. EverBank counts on private equity companies TPG, Sageview Partners and New Mountain Partners as investors.
The deal is expected to close in the fourth quarter. EverBank Financial Corp provides diverse range of financial products and services to its customers through multiple business channels. It provides services to customers through mail, over the phone and through websites at 14 of its Florida-based Financial Centers.