Wells Fargo & Co. has emerged as the front-runner to buy General Electric Co.’s railcar-financing unit, people with knowledge of the matter said.
An agreement to acquire the business, which has more than $4 billion in assets, could be announced by the U.S. Labor Day holiday Sept. 7, said the people, who asked not to be identified because the matter is private. A deal hasn’t been finalized, the people said. The process remains competitive, one of the people said. Sumitomo Mitsui Financial Group Inc. also is pursuing the business, the people said.
GE is selling the business as it hives off about $200 billion in lending assets in a retreat from financial services. By unloading the bulk of the GE Capital arm, the company wants to shed its too-big-to-fail label while focusing on industrial operations making products spanning jet engines, medical scanners and oilfield equipment.
The Chicago-based rail-equipment unit, GE Capital Rail Services, leases freight and tank cars and offers loans and maintenance services. GE has weighed selling it at least twice since 2008, and ended an auction in 2011 after concluding that the lessor was faring well as freight shipments recovered.
A spokesman for Fairfield, Connecticut-based GE declined to comment, as did representatives for Wells Fargo and Tokyo-based Sumitomo Mitsui.
GE shares rose 0.6 percent to $25.16 at the close in New York. They’ve fallen 0.4 percent this year, compared with a 3.4 percent decrease in the Standard & Poor’s 500 Index. Wells Fargo dropped 0.9 percent to $53.54.
Wells Fargo and Blackstone Group LP helped GE kick off its finance overhaul in April by agreeing to buy real estate assets valued at about $23 billion. San Francisco-based Wells Fargo is also exploring a deal for about $40 billion in commercial lending businesses from GE, people familiar with the matter said in June.
GE has announced a steady stream of sales since April, including its U.S. buyout-lending unit to Canada’s largest pension fund manager and an online bank to Goldman Sachs Group Inc.