Boston, MA 06/05/2014 (wallstreetpr) – PHH Corporation (NYSE:PHH) has agreed to spin off its Fleet Management Services unit to Element Financial Corp in a $1.4 billion cash deal.
Terms Of Agreement
On Monday, the company announced that it has signed an agreement with Element which has agreed to buy PHH Corporation (NYSE:PHH) Arval for $1.4 billion. As per the deal, Element will acquire all of the company’s fleet management businesses across North America, including its Sparks, Maryland office. It is anticipated that Element will headquarter its newly acquired fleet management business in this office. As the agreement is closed, both the involved parties will take upon transition services deals whereby they will offer mutual transition facilities to each other. To ensure a smooth transition’s procedure, they two are expecting it to last for up to 9 months after closing.
The agreement is structured as a stock in exchange of cash transaction, as per the terms of the agreement, but will be handled as an asset sale for tax issues under the U.S. Internal Revenue Code. PHH Corporation (NYSE:PHH) anticipates incurring after tax profit of around $250 million or $300 million. In addition, it expects net proceeds of post tax and transactions costs to be in the range of $750 million and $800 million. The company seeks to employ these net proceeds in reengineering its operations and build infrastructure, as also to invest in growth while reducing its debt. It expects to close the deal by the end of next month.
PHH Mortgage Businesses
PHH Corporation (NYSE:PHH) will carry on with the operations of its Mortgage Production unit and Mortgage Servicing division after the sale. The company will continue to provide mortgage solutions to real estate partners and leading financial institutions. It is already making efforts to strengthen its private brand business model, improving scope and gain from its Mortgage business units. It is also expanding the funds and supply for Mortgage Servicing Rights.
