GE looks to sell plastics business, buys oil services company

General Electric Co. has reportedly put GE Plastics up for sale for US$10 billion, and has also purchased oil services company Vetco Gray from a group of private equity funds for US$1.9 billion.
At press time, GE had not publicly confirmed that it was, in fact, accepting bids for its plastics division.
Pittsfield, Mass.-based GE Plastics, which has current estimated revenue of US$7 billion, has been hit hard in recent years by inflation in raw materials. Its value is estimated at between US$8 billion and $10 billion. In the first nine months of 2006, its revenue rose one per cent, to $5 billion, but operating profit fell 13 per cent, to $560 million.
As recently as October 2006, GE chief executive Jeff Immelt called GE’s plastics segment “the business we really need to remain focused on.” Immelt admitted, however, that higher-than-expected commodities prices had been pushing down margins.
Lloyd Trotter, the GE vice chairman who serves as president and chief executive of GE’s industrial unit, told investors late last year that one of his priorities would be to cut costs at the plastics unit.
Commenting on the Vetco Gray acquisition, Peter O’Toole, a GE spokesman, said that the company hoped to tap into growing global demand for energy. GE expects demand for energy to increase by 50 per cent by 2025, mostly driven by emerging economies, O’Toole continued.