PHH ends deal with GE Capital after merger fails to close

By Lisa Kerner

Charlotte, N.C., Jan. 2 - PHH Corp. is terminating its merger agreement with General Electric Capital Corp. because the merger was not completed by Dec. 31 as required under the companies' merger agreement.

In addition, PHH is requesting payment of the $50 million termination fee.

The March 15, 2007 merger agreement called for a wholly owned subsidiary of GE Capital to merge with and into PHH. GE Capital then planned to sell PHH's mortgage business to an affiliate of the Blackstone Group.

Pearl Mortgage Acquisition 2 LLC, the Blackstone affiliate, was unable to obtain the required debt financing for the purchase, according to a company news release.

As previously reported, GE Capital agreed to acquire PHH in an all-cash transaction to take the company private for $31.50 per share, or approximately $1.8 billion. PHH shareholders approved the deal on Sept. 16.

PHH's board of directors will decide whether to continue to explore strategic alternatives, a board spokesperson stated in the release.

PHH is a Mount Laurel, N.J., outsource provider of mortgage and vehicle fleet management services.

Danbury, Conn.-based GE Capital provides leasing, lending and capital investment products and services.

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