The Deal: Dexia Scraps GCS Capital Deal
NEW YORK (TheStreet) - Franco-Belgian lender Dexia SA Wednesday said it had scrapped a seven-month deal to sell its asset management unit to Hong Kong-based buyout firm GCS Capital for 380 million euro ($503 million) but that it still plans to sell the business.
The two sides signed a sale and purchase agreement on Dec. 12 but failed to meet a June 28 deadline for closing the deal. Although the deal now has clearance from the European Commission, Dexia said it had decided to scrap the SPA on July 15. The erstwhile buyer had a 10 working-day notice period from that date to close the transaction; that period ends on July 30.
Dexia was rescued by the governments of France, Belgium and Luxembourg during the credit crisis of 2008 and then again in 2011 when Europe's sovereign debt problems peaked. In November 2012, it secured another 5.5 billion euro bailout from the Belgian and French states. Dexia is going through an "orderly resolution" to wind itself down, with notable sales including the disposal of Turkey's DenizBank AS to Russia's Sberbank last August for about 6.5 billion Turkish lira ($3.4 billion).
The failure to close the asset management sale would be the latest of several stalled European financial services transactions. Belgium's RHJ International SA is still waiting for clearance to close its 192.8 million euro purchase of BHF-Bank AG from Deutsche Bank AG about 10 months after the deal was agreed upon, while the U.K.'s Co-operative Bank plc's planned £750 million-plus ($1.15 billion) bank branches purchase from Lloyds Banking Group plc collapsed in April on regulatory concerns. (Those proved to be well founded--the mutually owned lender is now preparing a controversial debt-for-equity swap).
Dexia is still waiting for regulatory clearance for the sale of its Sofaxis insurance unit to three mutuals for 136 million euro.
Dexia , whose core business was lending to public authorities, Tuesday put its exposure to the bankruptcy of Detroit at ¿305 million.
A GCS Capital spokesman said the company had noted Dexia's announcement but had no further comment. Dexia representatives couldn't immediately be reached. Advent International Corp., Bain Capital LLC, and Permira had participated in the auction for the asset management business before the Hong Kong investor entered exclusive talks in early December. HSBC plc advised GCS Capital on the Dexia deal.
Written by Laura Board in London