Textron Looks At Selling Avco During Review
Textron Inc. is considering a sale of its Avco Financial Services unit as a part of a strategic review of the big consumer-lending concern.</br></br>Based on its receivables outstanding of $7.73 billion and recent prices paid for similar companies, Avco Financial could be valued at about $4 billion. A sale of that scale would be the largest strategic move in the history of Textron, a conglomerate based in Providence, R.I., that makes Cessna airplanes and Bell helicopters and has other operations in automotive and industrial-fastener manufacturing.</br></br>People familiar with Textron's deliberations say that the company could decide to keep Avco after the review, but has been tempted by prices paid for other consumer loan companies recently, and has hired investment bankers Goldman, Sachs & Co. and J.P. Morgan to hunt for bidders. Other possibilities would be a partial or total sale to another company or a partial stock offering.</br></br>A sale of Avco would likely be followed by stepped-up acquisitions by Textron, which has purchased over 30 companies since 1992. The company has followed a strategy of add-on purchases that expand its current business lines.</br></br>Textron Financial Corp., which lends money to buyers to finance purchases of Textron's manufactured goods and is the company's other major financial-services segment, isn't on the block or part of the strategic review. Avco's loans are typically made for used cars, appliances and goods purchased on installment at interest rates above prevailing bank rates. Avco also makes real-estate secured loans and underwrites insurance.