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Advertising: GE Capital Puts on a Lending Roadshow

May 8, 2013 by Leave a Comment

GE CAPITAL this week is embarking on an elaborate advertising campaign with Slate.com featuring a six-month roadshow across the United States meant to stimulate its lending to midsize businesses.

According to research done by the National Center for the Middle Market at Ohio State University, businesses with revenue of $10 million to $1 billion account for more than 43 million jobs in the United States and one-third of the national private sector gross domestic product. GE Capital underwrites the center, founded in 2011. Steven Winoker, who follows General Electric for Sanford C. Bernstein Company, called lending to middle-market businesses a “profitable business and a core business” for GE Capital, adding that it was “probably better at originating this kind of business than its competitors because of its industrial heritage.”

According to Mr. Winoker, GE Capital generated 47 percent of total earnings for General Electric last year, up from 28 percent in 2009; he also said commercial lending and leasing — a large part of which is to midsize businesses — was responsible for about a third of GE Capital’s profit last year.

Mr. Winoker said G.E. generally had a “more advanced view of advertising and marketing and is more aggressive in its approach to marketing than most industrial companies, from its heritage of owning” NBC Universal, whose sale to Comcast was completed last year.

Nicholas P. Heymann, who follows G.E. for William Blair Company, said that one factor behind the campaign might be possible changes in banking regulations resulting from the Dodd-Frank law’s stress test for 2013 that could limit major banks’ ability to lend to smaller businesses.

“Some of GE Capital’s highest returns on investment come from its middle-market lending portfolio,” he said. “If there are changes from a regulatory standpoint, GE Capital wants to be optimally positioned to take advantage of any void that may be created from restricted money center bank lending.”

The campaign — which began Monday in Kansas City, Mo., and is considered native advertising, or content sponsored by advertisers — is the most elaborate initiative created by SlateCustom, the custom-publishing arm of Slate.com, the online magazine. Previous native advertising on Slate.com included a campaign by the Dairy Council, which looked at the impact of last year’s drought on dairy farmers, and distribution of a video promoting Coca-Cola’s anti-obesity campaign.

Ian Forrest, vice president of global marketing at GE Capital, said his company had run traditional banner advertising on Slate.com for the last two years. “The performance worked really well against our core target audience — middle-market, C-level executives,” he said.

He also said the new roadshow, a collaboration jointly developed by GE Capital and Slate.com, was aimed at providing a “holistic, 360-degree view of the middle-market opportunity,” and also to “touch customers, prospective customers, employees and policy makers, to start a dialogue and discussion.” Another goal, he added, is to motivate legislators to pass new regulations in support of middle-market business growth.

“The Roadshow for Growth” entails a bus tour through various cities across the United States. After Kansas City, it moves on to St. Louis, Indianapolis, Chicago, Detroit, Cleveland, Pittsburgh, New York, Dallas, Atlanta and Los Angeles, among others. It will end in Columbus, Ohio, in late October.

At each stop, the roadshow will host different events, like town hall discussions, conversations with the city’s mayor, and visits with middle-market businesses. In Kansas City on Monday, for example, there was a meeting with Mayor Sly James and a town hall session with GE Capital employees, while the Chicago visit on Thursday is to include a discussion moderated by Jacob Weisberg, chairman of the Slate Group, and featuring Mayor Rahm Emanuel and economist Austan Goolsbee, chairman of the Council of Economic Advisers during the first term of the Obama administration.

Daily blog posts, video and commentary on the roadshow will be published on a special Web site, roadshow.slate.com. The Web site is being promoted as a “sponsored section” on slate.com.

Lindsay Nelson, vice president of integrated programs for Slate.com, said her company had gone to “great lengths” to make it clear to readers that the roadshow’s online section was “a special section brought to you by GE Capital, SlateCustom, National Center for the Middle Market,” via a note on the site and a separate pop-up message.

This disclaimer is no doubt meant to avoid controversy like that generated in January when The Atlantic ran a story on its Web site about the Church of Scientology that resembled its regular content, though it was labeled “sponsored content.”

Mr. Forrest said GE Capital would promote the roadshow on Slate.com, various G.E. Web sites, and through digital advertising on Web sites of Yahoo Finance and Bloomberg. He said the total budget for the roadshow would be between $1.5 million and $2 million.

According to Kantar Media, GE Capital’s advertising expenditures in the last five years ranged from a low of $4.3 million in 2008 to a high of $58 million in 2010; last year’s spending was $9.3 million, almost $2 million of which was for Internet display advertising.

Loren Ghiglione, a professor at Northwestern University’s Medill School of Journalism, said the collaboration between Slate.com and GE Capital raised the question of “what it will do to the reputation of Slate.”

The program’s aim to motivate legislators to pass new regulations supporting middle-market businesses “sounds like lobbying to me. I don’t think that journalism and lobbying are the same thing,” he said.

Sharmila C. Chatterjee, a senior lecturer at the M.I.T. Sloan School of Management who studies business-to-business marketing, called the roadshow a “very nice way for GE Capital to connect with customers, establish credibility and gain their trust, three very important things in the day of information bombardment.”

She warned, though, that if the initiative was “hijacked by interest groups and gets politicized, the goal will not be fulfilled.”

Article source: http://www.nytimes.com/2013/05/08/business/media/ge-capital-puts-on-a-lending-roadshow.html?partner=rss&emc=rss

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DealBook: Blackstone Is Said to Make a Preliminary Bid for Dell

March 23, 2013 by Leave a Comment

2:43 p.m. | Updated

The Blackstone Group has sent a preliminary deal proposal to Dell Inc., people briefed on the matter said on Saturday, signaling that the investment giant may make a formal bid for the computer company.

The letter, sent late Friday night, was meant to keep talks going with a special committee of Dell’s board, one of these people said. It was not clear whether the Dell committee would choose to continue negotiating with Blackstone, though it is expected to make a decision as soon as Tuesday.

The company’s directors have spent the last 45 days trying to find alternatives to a $24.4 billion offer from Michael S. Dell and the private equity firm Silver Lake.

By the end of last week, advisers to the Dell directors were expecting initial proposals from both Blackstone and the billionaire Carl C. Icahn. Others that had been invited to participate in the go-shop period, including Hewlett-Packard and Lenovo, had long ago been discounted as potential buyers and were instead seen as simply taking a look at Dell’s books.

A spokesman for Dell declined to comment.

The emergence of potential rival bidders for Dell could help lift the price of a deal that shareholders have loudly complained is too low. Two of the company’s biggest outside investors, Southeastern Asset Management and T. Rowe Price, have said that they will not accept the current price of $13.65 a share.

Mr. Icahn, who has amassed what he calls a “substantial” stake in Dell, told its special board committee privately that he, too, opposed the current transaction and favored paying out a special dividend instead. He agreed to participate in the evaluating process last week.

Shares of Dell closed unchanged at $14.14 on Friday, indicating that investors were expecting a higher takeover offer.

Blackstone has spent several weeks talking with prospective partners, including TPG Capital and General Electric’s GE Capital arm. The firm has also spoken with Southeastern.

And it has approached technology executives like Mark V. Hurd, the president of Oracle Corporation, about potentially serving as chief executive of Dell should Mr. Dell decide to step down. So far, however, Mr. Hurd has expressed little interest, according to a person briefed on the matter.

Among the people leading Blackstone’s efforts is David Johnson, who until earlier this year was Dell’s in-house deal maker, people briefed on the matter have said.

The details of Blackstone’s offer were not immediately available. Among the possibilities the firm has considered is teaming up with GE Capital, which would take control of Dell’s financial services arm.

But Blackstone still faces some hurdles in putting together a final bid. Among them is arranging the enormous amount of financing needed. While Mr. Dell has committed to talking with potential rivals to Silver Lake — an important concession, since he controls about 16 percent of the company’s stock and is contributing $750 million — he is not obligated to strike an agreement with them on the same terms.

 

Article source: http://dealbook.nytimes.com/2013/03/23/blackstone-said-to-send-preliminary-offer-to-dell/?partner=rss&emc=rss

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DealBook: MetLife to Sell Bank Unit to GE Capital

December 27, 2011 by Leave a Comment

MetLife headquarters in Manhattan.Hiroko Masuike/The New York TimesMetLife headquarters in Manhattan.

MetLife announced on Tuesday that it has agreed sell the bulk of its retail deposits business to GE Capital, as it seeks to trim its operations and focus on its core insurance business.

Under the terms of the deal, GE Capital will acquire about $7.5 billion of MetLife’s deposits. The rest, about $3 billion in deposits, will be transferred over the next six months, MetLife said in a statement.

MetLife is swiftly dismantling its banking business, in a bid to ward off increased regulatory oversight. Although its deposit business, founded in 2001, has always been a small sliver of the business — representing just two percent — it was large enough to classify MetLife as a bank holding company. The status subjected MetLife to additional rules and increased scrutiny by federal regulators.

As part of similar efforts, other large insurers have also shed their deposits, including Allstate, which agreed in February to sell about $1.1 billion in deposits to Discover Financial.

“We do not believe it is appropriate for the overwhelming majority of our business to be governed by regulations written for banking institutions,” Steven A. Kandarian, MetLife’s chief executive, said in July, when MetLife first announced it was considering a sale of its depository business.

Steven Kandarian, chief of MetLife, testified at House panel in 2009.Mannie Garcia/Bloomberg NewsSteven Kandarian, chief of MetLife, testified at House panel in 2009.

Shares of MetLife opened higher on Tuesday, rising nearly 2 percent to open at $31.60.

MetLife’s sale comes amid increasing tension between the firm and its federal regulators. Last month, the Federal Reserve rejected a plan by MetLife to raise its dividend, barring the firm from increasing its payout until the next round of stress tests.

MetLife hired Deutsche Bank Securities as its financial adviser and law firm Wachtell, Lipton, Rosen Katz as its legal adviser for the transaction.

The deal is expected to close by the second quarter of next year.

Article source: http://feeds.nytimes.com/click.phdo?i=34eb83383110b5b04ccb5c9b07dab0d1

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G.E. Profit Exceeds Forecast

July 22, 2011 by Leave a Comment

General Electric reported profits and sales on Friday that slightly surpassed Wall Street’s expectations, suggesting that its streamlining strategy in the aftermath of the financial crisis continues on track.

The solid second-quarter results from G.E., the nation’s largest industrial company, whose products range from oilfield equipment to medical imaging machines, add further evidence of an improving outlook for major industrial companies.

Yet the strongest growth for G.E., as for other industrial companies, came in international markets, where revenue rose 23 percent in the quarter. Sales outside the United States account for 59 percent of G.E.’s industrial business.

The company’s giant financing arm, GE Capital, reported operating profits that more than doubled from the same quarter a year earlier. The finance unit, whose loans include consumer credit and commercial real estate, has been aggressively shedding bad debt since the financial crisis hit in the fall of 2008.

Some problem loans remain, mainly in commercial real estate. But GE Capital’s performance has improved steadily in recent quarters.

“There has been good growth in several of the industrial businesses, and GE Capital continues to recover,” said Richard Tortoriello, an analyst at Standard Poor’s.

The company’s net income for the second quarter rose 20 percent to $3.8 billion, up from $3.1 billion in the year-earlier quarter. G.E. reported earnings per share of 34 cents a share, a 17 percent gain from the previous year, when it reported earnings of 29 cents a share.

The average estimate of Wall Street analysts, as compiled by Thomson Reuters, was 32 cents a share.

G.E. reported revenue of $35.6 billion, down 4 percent from the year-earlier quarter, when it reported $36.9 billion revenue. The falloff was a byproduct of the company’s steps to narrow its focus, as it sold a majority stake in NBC Universal, the television network and movie studio, to Comcast. Excluding that from the year-to-year comparison, G.E.’s revenue would have increased 7 percent in this year’s second quarter.

The company’s revenue for the quarter was nearly $1 billion ahead of analysts’ consensus estimate of $34.7 billion.

G.E. reported its results before Wall Street opened on Friday. In a statement, Jeffrey R. Immelt, the chief executive, cited the company’s fifth straight quarter of double-digit profit growth and its ability to “execute in a volatile environment.”

Despite the costly repair of its finance arm, G.E. has continued to invest aggressively to expand some of its industrial divisions.

In the past nine months, for example, the company has spent more than $7 million on three acquisitions to bolster its oil-and-gas equipment business — Dresser, the John Wood Group and Wellstream Holdings. The companies make specialized equipment for oilfield and offshore production, widening G.E.’s range of offerings in that $10 billion-a-year unit.

G.E. is also increasing its investment in research and development, which is up 40 percent from a year ago, as it bets on innovations in future products and services, to fuel longer-term growth.

Article source: http://feeds.nytimes.com/click.phdo?i=fce461f1923e6070c060d6976288e673

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DealBook: Capital One to Buy ING’s Online Bank for $9 Billion

June 17, 2011 by Leave a Comment

Peter Foley/Bloomberg News

9:54 p.m. | Updated

Capital One Financial agreed on Thursday to buy the ING Group’s online banking unit in the United States for $9 billion in cash and stock, one of its biggest efforts yet to add to offerings beyond credit cards and other consumer lending.

Under the terms of the deal, Capital One will pay $6.2 billion in cash and issue $2.8 billion worth of new shares to ING, giving it a 9.9 percent stake. ING will also have the right to name a director on Capital One’s board.

Long known for cheeky credit card ads asking customers “What’s in your wallet?” Capital One is seeking to build up a national banking franchise. Buying ING Direct USA, one of the best-known online banks in the country, will help give Capital One a broader platform and a huge source of lower-cost funds.

Currently the eighth-biggest bank in the country by deposits, Capital One will rise to the fifth-biggest through the deal.

“The acquisition of ING Direct is a game-changing transaction that delivers attractive deal economics immediately and compelling long-term strategic value,” Richard D. Fairbank, Capital One’s chairman and chief executive, said in a statement.

ING was reluctant to shed its online banking business, one of its crown jewels and a leader in the expanding direct banking industry. But it was forced to sell off the unit by the European Commission as part of the bank’s 10 billion euro bailout in 2008.

“Although I regret that ING Direct USA will no longer be a part of ING, I am very pleased that we have found in Capital One a good home for our customers and employees, who are very important to the continued success of the ING Direct USA Business,” Jan H. M. Hommen, ING’s chief executive, said in a statement.

Capital One emerged the winner of a relatively crowded auction, one that also included General Electric’s GE Capital and the CIT Group, according to people briefed on the matter. One of the reasons Capital One prevailed was its willingness to shoulder more than $60 billion worth of mortgages and mortgage-linked securities.

In order to help pay for the transaction, Capital One said it planned to raise about $2 billion from a sale of new shares and $3.7 billion from selling new debt.

But the bank insists that the deal will pay for itself quickly. Capital One expects to reap $90 million in savings from combining back-end systems and staff, as well as $200 million from lowering funding costs. The transaction will also add to Capital One’s earnings per share beginning next year.

Shares in Capital One began rising on Thursday afternoon after Dow Jones reported news of the impending deal, closing up $1.13, or 2.4 percent, at $49.

The deal is expected to close by the end of the year or early next year, pending regulatory approval.

Capital One was advised by Morgan Stanley, Barclays Capital, Centerview Partners and the law firms Mayer Brown, Loyens Loeff and Wachtell, Lipton, Rosen Katz. ING Direct was advised by Deutsche Bank and JPMorgan Chase.

Article source: http://feeds.nytimes.com/click.phdo?i=2a0961d0223a19c2bea74547dc904901

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