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May 23, 2007

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Sabic acquires GE Plastics, pushes ahead PC plans

Guangzhou, China — Global petrochemicals supplier Saudi Basic Industries Corp. (Sabic; Riyadh) will acquire GE Plastics for $11.6 billion in cash, a move that propels Sabic’s plastics business from a pure polyolefins play deep into the markets for engineering thermoplastics. This is Sabic’s third large plastics acquisition, and certainly its boldest. In 2003 it acquired Dutch supplier DSM’s European polyolefins business to gain a foothold on that continent, and late last year acquired Huntsman’s European commodity chemicals business for $810 million, including the assumption of pension liabilities.

With GE Plastics, it grabs a much larger, and more global, supplier. Mohamed Al-Mady, vice chairman/CEO of Sabic, in a statement said, “This acquisition represents another important step in Sabic’s growth and diversification to become one of the world’s leading manufacturing companies…This business is complementary to our existing business without any overlaps. Sabic’s intention is to grow the business globally.” He added, “Sabic is well-positioned to do this, while adding high-performance plastics to the product range Sabic currently offers to customers.” The acquisition, subject to regulatory approvals, should be completed by the third quarter of 2007. GE Plastics is closely identified with the firm’s Lexan polycarbonate but also is a leading supplier of ABS, SAN, ASA, PPE, PC/ABS, PBT, and PEI, as well as the LNP line of specialty compounds.

Khaled Abdullah Al-Luhaidan, product manager, PC, at Sabic told MPW at Chinaplas that the company still plans to go ahead with the construction of a 260,000-tonnes/yr PC facility in Saudi Arabia with completion slated for 2009 unless management decides against it. Industries sources?point out that an additional 200,000 tonnes/yr of PC capacity are?needed annually to keep pace with growing global demand ?estimated at 2.6 million tonnes in 2007.?Sabic is the largest public company in the Middle East, one of the world’s 10 largest petrochemicals manufacturers, and the fourth largest global supplier of polyolefins. It is well integrated “to the wellhead”—a phrase plastics suppliers are happy to use when their firms have that cheaper feedstock advantage.

The business was founded in 1976 when the Saudi Arabian government decided to use the hydrocarbon gases associated with its oil production as the principal feedstock for production of chemicals, polymers, and fertilizers. The government owns 70% of Sabic shares with the remainder held by private investors.—[email protected]

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