General Electric (GE-NYSE) has confirmed that it is selling its plastics unit to Saudi Basic Industries Corporation ("SABIC"). The proceeds will be valued at $11.6 Billion in cash plus the assumption of liabilities. The deal is of course subject to regulatory approvals and oversight committees since this is an international sale, but plastics is not exactly a GE supersecret that would have much in terms of national security issues.
The share buyback will likely be accelerated and is pegged at $6 Billion but could as much as $8 Billion. GE will receive net after-tax proceeds from the sale of approximately $9 billion and will generate an approximate after-tax gain of $1.5 billion used to fund restructuring across GE’s businesses and the share repurchase.
This will be a good divestiture for GE in that it has one of the least focused operations to its conglomerate.
Jon C. Ogg
May 21, 2007
Jon Ogg can be reached at [email protected]; he does not own securities in the companies he covers.
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