Cerberus to receive 1bn euro to acquire HSBC French retail activity - What are your thoughts?
Hi everyone,
As said in title, HSBC will pay 1bn to Cerberus to divest its French retail activity. I am very curious about this news.
How is this a possible deal? Are there any precedents?
Why does not HSBC just shut down instead of paying an acquirer to takeover this subsidiary?
It sounds like an amazing deal in term of potential IRR for Cerberus, but how can a PE investor accept to acquire a business that is only losing money?
Very curious to hear your thoughts about it.
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They are probably being paid to (1) assume a bunch of liabilities and costs and/or (2) inject sufficient capital into the business. This type of transaction, while not super common, is more common than you'd think in financial services given that balance sheet businesses can come with large liabilities and require the businesses to hold large amounts of capital.
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