SAN FRANCISCO — Transamerica Corp. said it has acquired 40,000 home equity loans from ITT Corp. for $1.03 billion in cash.
The move strengthens Transamerica's financial services subsidiary and is the latest step in ITT's transformation from a financial services company to a casino company.
San Francisco-based Transamerica said its Los Angeles-based Transamerica Financial Services consumer lending unit is paying about book value for the Minneapolis-based lending business.
New York-based ITT has been shifting its assets from the modestly profitable finance business into the potentially lucrative but fiercely competitive gambling and entertainment industry.
Last month, ITT and its partner, Cablevision Systems Corp., purchased New York's Madison Square Garden for $1 billion from Viacom Inc. The deal included the New York Knicks basketball and New York Rangers hockey teams as well as a cable television service.
Also last month, ITT said it was planning to sell nearly 20% of its Sheraton Hotel franchise operations, including 200 hotels in North America, in a public offering.
And in December, ITT sold two finance units in separate deals to Norwest Corp. and Deutsche Bank for $3.7 billion.
It also said it completed the previously announced sale of financial service businesses to General Electric Co.'s GE Capital Corp. for $1.8 billion.
Transamerica, an insurance and financial services company, said its home equity loan portfolio was $3.52 billion at the end of 1994.
"This significantly increases the size of our portfolio and is the biggest portfolio acquisition for us," said Richard Olsen, a Transamerica spokesman.
Until this purchase, Transamerica's largest home equity loan acquisition was the $491-million buyout of Nova Financial Service from First Interstate Bancorp in July 1990.
The purchase includes only the portfolios and no support services or staff. It also includes no assumption of debt, Olsen said.
Investors welcomed the companies' latest moves. ITT stock jumped $1.50 to $103.125 and Transamerica rose 50 cents to $57.125 on the New York Stock Exchange.