PHH ends deal with GE, Blackstone

NEW YORK (Reuters) - Mortgage and vehicle fleet company PHH Corp (PHH.N: Quote, Profile, Research, Stock Buzz) said on Tuesday it terminated its nearly $2 billion sale to General Electric Co (GE.N: Quote, Profile, Research, Stock Buzz) and Blackstone, after the private equity firm failed to obtain required financing for the deal.

GE and the Blackstone Group (BX.N: Quote, Profile, Research, Stock Buzz) had agreed in March to acquire PHH for $1.8 billion. Under the terms, GE would retain PHH's vehicle fleet company PHH Arval and would have sold PHH Mortgage to Blackstone immediately after closing.

"The board will determine in due course whether to continue to explore the company's strategic alternatives," A.B. Krongard, nonexecutive chairman, said in a statement.

The company said it will not disclose any developments until the board has made a decision. PHH has requested a termination fee of $50 million from the Blackstone Group.

Blackstone said it shared PHH's disappointment in the outcome.

"Blackstone was prepared to close its end of the transaction using the financing that in March was originally committed to be made available," spokesman John Ford said in an e-mail to Reuters. "We regret that the banks are now unwilling to provide financing under the terms they originally agreed to."

The Blackstone spokesman said the company was not prepared to comment on whether it would pay the $50 million termination fee.

Ford also could not comment on whether Blackstone would take legal action against the banks financing the leveraged buyout -- JPMorgan (JPM.N: Quote, Profile, Research, Stock Buzz) and Lehman Brothers Holdings Inc. LEH.N

PHH shares closed on Monday at $17.64, down 14 cents on the New York Stock Exchange. In March, the GE and Blackstone deal valued the company at $31.50 per share, and PHH stock had traded as high as $31.52 in July.