GE Plastics to be sold to Saudi firm for $11B
Latest in growing trend of chemicals and plastics industries going to the Middle East
By Dave Hannon -- Purchasing, 5/18/2007 8:38:00 AM
Various news services are reporting that General Electric will sell its GE Plastics unit to Saudi Basic Industries Corp. (SABIC) for $11 billion. No official word has been released as of this time from either company.
The Wall Street Journal, citing people familiar with the matter that it did not identify, said an agreement could come as soon as Monday on the deal.
“This is a good move for SABIC,'' said Tony Potter, director of olefins at Houston-based Chemical Market Associates Inc. in a Bloomberg News story. “It gets them marketing expertise, technology and access to markets. Without GE, SABIC was perhaps faced with penetrating quite a sophisticated market from scratch, where you don't just compete on the price of your feedstock.''
SABIC was identified as a potential bidder for GE Plastics in March. Prior to its interest, the top bidders for GE Plastics were primarily investment firms.
According to the Associated Press, Sabic, one of the largest non-oil companies in the Middle East, has manufacturing and research facilities around the world. With the plastics unit, the Saudi company would be a global titan in the production of materials used to make bottles, food and beverage packaging, grocery bags, toys, car parts and other everyday items.
The sale of GE Plastics to a firm in the Middle East is another sign in a long-term trend of growth of the chemicals and plastics industries in the oil-rich region. In February, Stefan Van Straelen, vice president of global chemical purchases at consumer products giant Procter & Gamble, told Purchasing that the company has established a sourcing group in Dubai and that was a migration in chemicals manufacturing from the West to the Middle East, where energy products are more readily available with limited transportation costs.
And in May, Purchasing reported that by 2012 ethylene production capacity in the Middle East will equal that of North America. Because of their proximity to cheap feedstocks, ethylene producers in the Middle East have a cost advantage over producers elsewhere in the world, particularly in Europe and North America.
IEA sees more oil use in 2010
11/17/2009SABIC closes on GE Plastics buy
08/30/2007
Now Playing: 