CIT Sells Home Loan Unit for $1.5 Billion
07/01/08 - 09:42 AM EDT
Debra Borchardt
CIT expects to record a $2.5 billion loss on the home lending unit. The net proceeds from the two deals should generate roughly $1.8 billion in cash.
"The sale is at a significant discount, but we think the price is fair given the overall housing market," Peek said. CIT is predominantly a commercial finance company, but has valuable assets in its railcar portfolio and aircraft leasing portfolio. The company made ill-timed jumps into the housing and student loan markets. Argus Research analyst David Ritter considers the company a takeover target. "We believe that CIT may be an attractive takeover target due to its deeply discounted valuation, its strong core portfolio of assets, and the potential for an acquiring company to expand CIT's net interest margins," Ritter wrote. "This gives us an additional cushion around maturing debt in 2008,"Leone said. "We think our capital position remains relatively strong. We expect to be profitable going forward." The stock recently was rising 12.3% to $7.64 in recent trading.
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