GE Plastics an attractive acquisition – analysts

09 January 2007 16:59  [Source: ICIS news]

(Adds GE response in paragraphs 4-6 and the latest New York Stock Exchange share data in paragraph 11.)

TORONTO (ICIS news)--General Electric (GE) should be able to sell its GE Plastics business for $10.0bn (€7.7bn), if not more, as the business is very attractive to strategic investors, analysts at Citigroup and Standard & Poor’s said on Tuesday.

Interested bidders could include Dow Chemical, BASF and Saudi Arabia's SABIC, Citigroup said. SABIC is an interesting possibility given its access to very inexpensive feedstocks, which are central to the cost structure of the plastics business, the analysts added.

The analysts were commenting on Wall Street speculation that GE was planning to sell its plastics unit.

“Our policy is not to comment on market rumour or speculation,” said Russell Wilkerson, GE director of financial communications.

“Our position with respect to the portfolio is to always been reviewing our businesses to maximise shareholder value and this includes the consideration of dispositions ands acquisitions,” Wilkerson added.

“Recently, we have pointed out that Plastics is in a tough environment with high commodity costs and a competitive environment,” Wilkerson said.

In 2005, GE Plastics generated about $6.6bn in revenue and $867m in operating profit, Wilkerson said.

The Wall Street analysts based their $10bn sales price estimates on the recent disposal by GE of its advanced materials business.

“We believe the asking price could offer potential bidders attractive returns, would not be surprised to see the sale price rise above this level,” Citigroup said.

Citigroup estimates GE Plastic’s sales for 2006 at $6.7bn, with operating profits of about $738m.

Shares of GE were trading on Tuesday morning at $37.66, up 11 cents, on the New York Stock Exchange.

(Additional reporting by Nigel Davis)

($1 = €0.77)

By: Stefan Baumgarten
+1 713 525 2653

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