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Element Financial Corporation, a Toronto-based vehicle and equipment financing company, has agreed to buy PHH Arval, the commercial fleet management unit of PHH Corp., for roughly $1.4 billion in cash.

Cravath, Swaine & Moore is acting as outside counsel to Element Financial in connection with the deal, which was announced Monday, along with Canada’s Blake, Cassels & Graydon. PHH Corp., meanwhile, is being advised by Kirkland & Ellis and DLA Piper.

Element Financial said the price it has agreed to pay to acquire PHH Arval is equal to 1.5 times the book value of the company. The acquisition, the largest ever for Element Financial, has reportedly been in the works since at least February. It is expected to close by July 31, subject to regulatory and financing approvals, the companies said.

As part of the deal, Element Financial will assume all of PHH’s fleet management operations in North America and its headquarters in Sparks, Md., which is slated to become the Element Financial fleet headquarters.

After closing and price adjustments, PHH expects to record an after-tax gain of $250 million to $300 million and net proceeds of $750 million to $800 million after taxes and expenses. The company said it plans to spend some of those proceeds retooling its mortgage business—which caters to financial institutions and real estate concerns—and return the rest to shareholders in the form of cash.

In a statement included in the press release announcing the deal [PDF], Steven Hudson, Element Financial’s chief executive and chairman, said, “This transformative acquisition achieves all of the strategic and financial objectives we established when we set out to expand our domestic fleet management business into the U.S. market.”

PHH Corp. CEO and president Glen Messina said in a statement of his own: “We are confident that we have the right strategy in place to respond to changing mortgage market dynamics and sustain a leading position in the mortgage industry. This transaction sharpens PHH’s overall strategic focus, enhances our financial flexibility, and positions us to deliver greater shareholder value,” in a news release.

For PHH Corp., the sale comes on the heels of a first quarter that saw the company lose $42 million as the result of a lukewarm mortgage market. Hedge fund investors reportedly have been urging the company to split its fleet lending and mortgage businesses. The company is also facing a lawsuit filed against the mortgage unit in January by the Consumer Financial Protection Bureau over alleged irregularities related to mortgage insurance. PHH Corp. said at the time it would vigorously defend itself against the allegations.

The Cravath team representing Element Financial is being led by M&A partner Erik Tavzel. The other lawyers from the firm working on the matter include securities partners Stephen Burns and Joel Herold; executive compensation and benefits partner Eric Hilfers; intellectual property partner David Kappos; and tax partner J. Leonard Teti II. The Cravath associates with roles on the assignment are Ali Assareh, Audry Casusol, Alan Grinceri, Aaron Gruber, Benjamin Landry, Matthew Williams and foreign associate attorney Nadine Hartung.

The Blake Cassels team representing Element Financial in connection with the acquisition is being led by M&A partner David Toswell. Also advising are M&A partners Stephen Ashbourne, Shlomi Feiner, Peter MacGowan and Markus Viirland; capital markets partners Mark Adkin and Chris van Loan; information technology partner Christine Ing; employment partner Holly Reid; and tax partners Jeffrey Shafer and Jeff Trossman. The associates from the firm working on the matter are Karim Amlani, Chris Barker, David Colman, Jacob Gofman, Mike Hickey, Niki Khatami, Doug Robertson, Tom Rowe and Chris Salamon.

Chris Marshall, Element Financial’s senior legal counsel and corporate secretary, is a former Blake Cassels associate, Reuters reports.

The New York-based Kirkland team advising PHH Corp. is composed of corporate partners Stephen Fraidin, Jeffrey Symons and Stefanie Wool, along with corporate associates Jordan Koss and Jonathan Ross.

William Brown serves as PHH Corp.’s senior vice president, general counsel and secretary.

DLA Piper representatives did not immediately respond to requests for comment about which of its lawyers are working on the matter.