Saudi Basic Industries Corp. (SABIC), the world’s largest chemical firm by market value, is considering a bid for the plastics unit of General Electric Co., a source familiar with the situation said on Monday.
The company was reported in yesterday’s Financial Times to be considering a $12 billion approach for the GE division.
A source stated that SABIC had appointed Citigroup to prepared an offer in advance of the first round of an action for the business in April.
Officials from GE, SABIC and Citigroup all declined to comment.
General Electric admitted in January that it was looking to sell off slow growth businesses including its plastics unit in order to focus on higher growth areas like energy, and healthcare technology.
The company’s plastics division has been suffering falling profits for the past two years because of inflation in natural gas and raw materials such as benzene. Profit in 2006 was $674 million, down from $867 million in 2005.
Analysts quoted in the International Herald Tribune said that a price of $12 billion for the GE plastics division would be above expectations.
Banc of America Securities analyst Robert McCarthy said that a sale price greater than $9 billion would have a positive impact on GE stock.
SABIC’s potential investment in GE is not the only overseas investment in play for the petrochemical giant.
The company is also working on a $5.2 billion petrochemical complex in China in partnership with private Chinese firm Shide.
The project is currently being held up by regulatory approvals in Beijing.
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