May 22 2007
GE and Saudi Basic Industries Corporation (SABIC) today announced that they had reached agreement for SABIC to acquire GE Plastics for a purchase price of $11.6 billion. Announcement of the acquisition was made by Jeff Immelt, Chairman and CEO of GE and Mohamed Al-Mady, Vice Chairman and CEO of SABIC.
"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 Mr. Al-Mady, in making the announcement. "This acquisition represents another important step in SABIC’s growth and diversification to become one of the world’s leading manufacturing companies."
"This business is complementary to our existing business without any overlaps. SABIC’s intention is to grow the business globally", he added. "SABIC is well-positioned to do this, while adding high-performance plastics to the product range SABIC currently offers to customers."
In earlier deals, SABIC has acquired DSM Petrochemicals business in Europe and the Huntsman Petrochemicals business in the UK. In each case, existing management teams continued to manage the business, and have been given SABIC’s support to implement various investment and growth initiatives.
"GE selected SABIC as the winner of this auction both for price as well as the company’s premier position as one the world’s fastest growing, innovative companies," said Jeff Immelt. "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."
SABIC Americas, based in Houston, is the foundation for the company’s long-standing commitment to U.S. operations, having operated here for more than 20 years. SABIC also has long-term partnerships with prominent companies like ExxonMobil and Shell.
"SABIC has deep roots in America and extensive experience in operating in the U.S. as a leading chemical company," explained Mr. Al-Mady. SABIC currently employs more than 200 people in the U.S. through its own operations and a joint venture in New Jersey, plus another 500 people who are employed indirectly through suppliers. With the acquisition, SABIC employment will swell to almost 30,000 people. With worldwide manufacturing operations, GE Plastics is well-positioned to meet the needs of global customers under SABIC’s ownership.
The closing of the transaction is subject to completing regulatory approvals and is targeted to occur by the third quarter of 2007.
SABIC's advising bank is Citi as the investment banker, Shearman & Sterling/ Van Bael & Bellis as legal counsel, KPMG as the pension, financial and tax advisor, MERCER as the HR and Pension advisor, Jacobs Consultancy as the consultant on the plants, URS as the advisor of environmental Health and Safety and Booz Allen Hamilton as General consultant and program manager.