GE to sell Plastics for $11.6 bln, plans buyback

BOSTON, May 21 (Reuters) General Electric Co. said on Monday it agreed to sell its struggling GE Plastics business to chemicals company Saudi Basic Industries Corp. in an .6 billion cash deal.

GE placed the Plastics unit, where profit last year slipped 22 percent to 4 million, on the block in January. GE Plastics last year generated .65 billion in revenue.

The price being paid by Riyadh-based SABIC was more than some investors had been expecting.

''I'm glad they got it done, and I'm glad they got more than people were maybe expecting,'' said Peter Klein, senior portfolio manager at Fifth Third Asset Management, a Cleveland-based company that manages about billion and holds GE shares.

GE said it would receive net after-tax proceeds of about billion, which would primarily be put toward the company's current stock buyback.

About billion will go toward buying back shares of the company, which has a 0.25 billion market capitalization, GE said.

GE is the world's second-largest company by market capitalization, behind Exxon Mobil Corp.

''That will bump the stock up a little bit,'' said Klein.

''That's not a bad thing. If they need more they can always go out and raise some more ... But I'm glad to see that they're not sitting on it thinking, 'What should we do?''' GE shares rose 35 cents, or 0.9 percent, to .31 in pre-market trading, from a .96 close on the New York Stock Exchange.

FOCUS SHIFT The Fairfield, Connecticut-based conglomerate decided to sell the slow-growing plastics business as part of its effort to focus on faster-growth industries. It said it was putting plastics up for sale after starting the year by negotiating billion in takeovers, including parts of health-care company Abbott Laboratories Inc., the aerospace business of Britain's Smiths Group Plc and privately held oil and gas field equipment maker Vetco Gray.

''This transaction is another important step in the execution of this strategy, which has created a faster-growing, higher-returning set of businesses capable of delivering sustained performance,'' GE Chairman and Chief Executive Jeff Immelt said in a statement.

GE expects the deal to close in the third quarter.

GE shares have lagged the major U.S. stock indexes for the past few years. As of Friday's close, they were down 0.7 percent for the year, at a time when the Dow Jones industrial average .DJI>, of which GE is a component, was up 8.8 percent, at a record high.

GE said that Brian Gladden, who currently serves as vice president of resins at GE Plastics, which employs 10,300 people, will become president and CEO of the new business. Charlene Begley, who currently holds that position, will move to a corporate role in GE focused on closing the deal.

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