CIT announced in March it was looking to sell noncore assets and officially listed the $4 billion rail leasing business as one of those assets in April, according to The Deal's Auction Block. In addition to a sale, CIT reportedly is open to a joint venture or simply selling a stake in the business.
GE put its $4 billion railcar leasing unit, GE Railcar Services, on the block in May, but the auction was eclipsed by the larger GE Appliance bidding announced at the same time.
According to Reuters, the accounting value of CIT's rail portfolio was about $4.4 billion, and GE's rail assets had a net carrying value of about $2.8 billion. But the final prices of the units could take a hit due to the economy, notes the Reuters story.
So who could be potential bidders? Reuters citing unnamed sources suggests corporate leasing finance giant GATX Corp. could bid on CIT's unit. Additionally, CIT and General Electric are both classic American companies that Warren Buffett loves to buy, so perhaps Berkshire Hathaway Inc., which owns Burlington Northern Santa Fe Corp., might step forward. Another dealmaker with an interest in the railroad business is Carl Icahn, who until recently had a stake in American Railcar Industries Inc. However, if Reuters is right, this race may not conclude until the end of the year. - Maria Woehr
See story from Reuters
See related story about GE auctions from The Daily Deal
See related story about CIT auctions from The Daily Deal
The race is on. In order to cut down debt, CIT Group Inc. and General Electric Co. are trying to sell off their railcar leasing businesses. But both auctions have been slowly chugging in an uphill battle against the tight credit markets and lack of buyers.
