General Electric Co is planning to divest stakes in its joint venture auto-financing and credit card businesses in South Korea, people familiar with the matter told Reuters, as the U.S. conglomerate continues to trim its exposure to the financial services sector.
GE has a 43 percent stake each in the two businesses it partners with Hyundai Motor Co and the South Korean company has the right of first refusal over the stakes under an agreement entered into 10 years ago. Hyundai is widely expected to buy back GE's shareholding, one of the people said.
The U.S. company, which is expected to get more than $1 billion from the planned sale, and Hyundai are working with separate investment banks on the deal, the person said.
GE had ploughed close to $1 billion into the two joint ventures in 2004, and it has recouped most of the initial investment in the form of dividends, the person added. It is also in the process of selling its consumer finance business in Australia and New Zealand, other people familiar with the plan said.
Last year, GE sold its stake in Thailand's Bank of Ayudhya. The U.S. conglomerate has been shrinking its financial services arm GE Capital as Chief Executive Jeff Immelt focuses more on manufacturing large industrial products.
GE's spokesman in South Korea, Bill Joh, declined to comment on the matter, while representatives at Hyundai could not be immediately reached for comment.
In response to a local South Korean media report last week, Hyundai Motor said it had started "considering amending and complementing its shareholder contract with Hyundai Capital and GE Capital," but nothing had been decided over stake acquisition.
The Wall Street Journal reported on Thursday that GE was in early stage talks to sell its stakes in the South Korean joint ventures.
Sources declined to be identified as the information is private.
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