Saudi chemical giant to buy GE Plastics for 11.6 bln dlrs

Saudi chemical giant to buy GE Plastics for 11.6 bln dlrs
Published: Monday May 21, 2007

US conglomerate General Electric said Monday it had agreed to sell its plastics division, GE Plastics, to state-controlled Saudi Basic Industries Corporation (SABIC) for 11.6 billion dollars.
GE Plastics is a global supplier of plastic resins used in numerous industries, including the automotive, healthcare, building and construction, and telecommunications sectors.

The deal was announced by GE chairman and chief executive Jeff Immelt and SABIC CEO and vice chairman Mohamed Al-Mady, and follows intense press speculation that such a deal was in the works.

"This acquisition represents another important step in SABIC's growth and diversification to become one of the world's leading manufacturing companies," Al-Mady said.

The transaction marks one of the largest acquisitions of a western business by a Middle East company.

"This business is complementary to our existing business without any overlaps. SABIC's intention is to grow the business globally", SABIC's CEO added.

The Saudi firm's US arm, SABIC Americas, is based in Houston, Texas, and already has notable operations in the United States, but the deal with GE will significantly enlarge its global footprint.

SABIC is the largest public company in the Middle East by market capitalization, currently around 80 billion dollars, and one of the world's 10 biggest petrochemicals manufacturers.
The Saudi firm has had long-term relationships with other big energy groups including ExxonMobil and Royal Dutch Shell.

"With a strong reputation as a safe, responsible 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's Immelt said.

The deal follows in the footsteps of SABIC's acquisition of the DSM Petrochemicals business in Europe and the Huntsman Petrochemicals business in Britain.

Saudi Arabia's government owns 70 percent of SABIC shares, while the remaining 30 percent of the firm's shares are controlled by private Middle East investors.

The companies hope to finalize the 11.6-billion-dollar deal, which is subject to regulatory approvals, by the third quarter of the year.

SABIC, which is headquartered in the Saudi capital of Riyadh, is being advised by Citigroup among other firms.