SABIC wins auction to acquire GE Plastics for US$11.6 billion
General Electric Co. (GE) and Saudi Basic Industries Corporation (SABIC) have reached an agreement for SABIC to acq...
“As a global operating company, SABIC has a long-term, strategic interest in the people, communities, customers, products, plants and technology of GE Plastics,” said SABIC vice chairman and CEO Mohamed Al-Mady in a statement on Monday. “This acquisition represents another important step in SABIC’s growth and diversification to become one of the world’s leading manufacturing companies.”
SABIC has previously acquired DSM Petrochemicals business in Europe and the Huntsman Petrochemicals business in the United Kingdom.
“GE selected SABIC as the winner of this auction both for price as well as the company’s premier position as one of the world’s fastest growing, innovative companies,” said GE chairman and CEO Jeff Immelt. “With a strong reputation as a safe, responsibly and efficient operator of large, state-of-the-art chemical plants, coupled with a commitment to investment in technology, SABIC is the smart choice to grow the GE Plastics unit.”
GE announced its intentions to sell the plastics division in January 2007, and valued the business at US$8 billion to $10 billion.
“This is a world-class businessbut it doesn’t fit with the high yield portfolio that Jeff [Immelt] is building,” noted a GE spokesperson.Headquartered in Pittsfield, Mass., GE Plastics reported a net of US$674 million in the fourth quarter of 2006. At the time, Immelt made note of GE’s intention to “exit “slower-growth and more volatile businesses.”
The closing of the transaction between GE and SABIC is still subject to regulatory approval, and is targeted to occur by the third quarter of 2007.