CIT to Buy Canadian Lender

CIT Group Inc., a lender to consumers and businesses, agreed on Monday to buy Canada’s Newcourt Credit Group Inc. for $4.1 billion in stock, creating the largest publicly owned finance company with $50 billion in assets.

CIT, a 91-year-old lender that first financed horse-drawn carriages, will exchange 0.92 of a share for each of Newcourt’s. The acquisition values the Toronto-based company, which makes equipment loans to companies, at $27.77 a share, a 7.3% premium over Friday’s close.

Livingston, N.J.-based CIT will almost double its assets, while Newcourt will be able to reduce its borrowing costs after debt-ratings downgrades forced it to search for a suitor late last year.

Newcourt shares had fallen 47% in the last year.

On the New York Stock Exchange, CIT shares fell 56 cents to close at $30.19 and Newcourt shares rose 81 cents to close at $26.63.

“This deal solves all Newcourt’s funding problems and may cause some new ones for CIT,” said E. Reilly Tierney, an analyst at Fox-Pitt Kelton Inc.

CIT, rated Aaa3 by Moody’s Investor Service Inc., was placed under review for a possible downgrade by Moody’s. Moody’s placed Newcourt, which it rates Baa3, under review for a possible upgrade.