Mumbai: Saudi Basic Industries Corporation (SABIC), the world's largest chemical firm by market value, is considering a bid for the plastics unit of General Electric Company, reports quoting sources familiar with the matter said.
SABIC, a large chemical company based in Riyadh, may bid up to $12 billion for GE's plastics unit, media reports said. SABIC did not comment on the reports.
However, reports quoting SABIC sources familiar with the matter said: "We are considering a bid for GE's plastics unit," adding "It's one of the many options on offer in the international market which deserve to be examined."
SABIC has hired Citigroup to prepare an offer before the first round of the division's auction in mid-April, the Financial Times reported.
General Electric, which makes a variety of finished plastics products, from lightweight car fenders to heat-resistant films in laptop computers, had in January said it might sell GE Plastics, which has struggled amid volatility in crude oil prices, the main source of raw materials.
Besides SABIC, others in the run include private equity firm Blackstone Group LP which has teamed up with Koch Industries, Apollo Investment Corporation, Kohlberg Kravis Roberts, the Carlyle Group and Bain Capital - all private equity firms.
GE Plastics makes plastics for automotive parts, computer enclosures, compact disks, telecoms equipment and construction materials. The business contributed to a 12 per cent drop in GE industrials' fourth quarter 2006 income.
SABIC, which has offices in Houston and Sugarland, Texas, has recently been using its capital to expand. Last year it paid $700 million in cash for Huntsman Corp.'s European Base Chemicals and Polymers business.
SABIC is 70 per cent owned by the Saudi Arabian government and is the largest public company in the Middle East.
SABIC, whose annual revenues exceed $23 billion, plans to nearly double its production to 100 million tonnes by 2015 by building plants in China, India and Saudi Arabia, and through the purchase of US and European firms.
The auction, run by Goldman Sachs, prohibits the four main bidders -- all private equity groups -- from teaming up with each other.