GATX bids over $3 billion for GE railcar unit: source

By Jui Chakravorty Das

NEW YORK (Reuters) - GATX Corp (GMT.N) is offering more than $3 billion for General Electric Co's (GE.N) rail car leasing business, a source familiar with the discussions said.

GATX is the leading bidder for the unit and negotiations are ongoing, the person said.

A GE spokesman declined to comment. GATX was not immediately reachable for comment.

CIT Group Inc (CIT.N), a commercial lender hit hard by the credit crunch, is also looking to sell its rail car leasing unit.

Lease financing company GATX, which controls one of the largest rail car fleets in the world, was also seen as a contender for CIT's business, another source familiar with the matter told Reuters last week.

GE's rail assets had a net carrying value of about $2.8 billion as of the end of last year on its balance sheet. The accounting value of CIT's rail portfolio was about $4.4 billion.

For buyers, these assets could be attractive. Returns on investment for rail car leases are often over 15 percent a year and with the price of scrap metal rising, the value of rail cars is also rising.

CIT Rail owns and manages a fleet of more than 100,000 rail cars. GE Rail Services' assets include 165,000 rail cars and 120,000 intermodal trailers, containers and chassis.