December 1, 2006
The answer, it seems, is a distinct ’probably’, with a GE Plastics spokeswoman at its facility in Bergen op Zoom, The Netherlands, saying the firm would not comment on the speculation raised after articles appeared in nearly every leading mainstream and business newspaper on Jan. 9, following a report in The Wall Street Journal that cited unidentified sources. The spokeswoman’s comments are hardly a confirmation, but still a pronounced change from the firm’s “No, not for sale” comments of the past year as rumors have circled about the business’s divestment.
As recently as November 2006 at events in Denver and New York City, officials told MPW that the business was not for sale. Tim O’Brien, VP GE Plastics Americas, attempted to nip, the at the time recently leaked notion, in the bud at a press conference in New York announcing an expansion of Ultem capacity. “We wanted to make sure it’s a non-story as quickly as possible,” O’Brien told gathered members of the press (November 2006 First Look). At the Denver stop in its traveling Innovation Seminar road show on Nov. 9, 2006, O’Brien went through the investment the company has made in plastics, including four global research centers, as proof of the parent company’s long-term interest. “We wouldn’t have that kind of investment in place if we did not see a lot of room for growth in this business going forward.”
Open speculation about GE’s divestment of its plastics business, headquartered in Pittsfield, MA and accounting for some $7 billion in annual sales of engineering thermoplastics, began in earnest last autumn when GE’s CEO, Jeffrey Immelt, himself a former president of GE’s plastics business, singled out its poor profitability during an financial results’ teleconference. Charlene Begley has been president and CEO of GE Plastics since July 2005. Citigroup Investment, in a report issued on-line last month (https://www.mycititrade.com/research/stocks/port_strat.html), stated “the disappointing performance of GE Plastics increases the likelihood that it will be sold,” and speculated that BASF and Dow could be potential strategic investors, or that the business could be sold to a financial investor, much as GE sold its Advanced Materials business late last year to Apollo Management. GE Plastics’ “disappointing performance” is relative, of course; the plastics business unit is profitable, but not as profitable as many of GE’s other units.
One other potential strategic investor may be Saudi Basic Industries Corp. (Sabic), which in 2003 acquired DSM’s polyolefins business. Sabic to now has no footprint in engineering thermoplastics; both Dow and BASF are established suppliers of these materials. GE Plastics is closely identified with the firm’s Lexan polycarbonate but it also is a leading supplier of ABS, ASA, and other materials, blends, and compounds.—[email protected]
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