GE's business with Saudi Arabia has been growing over the past year. In December and January alone, the company locked up almost $2 billion in orders for power-generating and water-processing infrastructure projects.
GE Plastics, headquartered in Pittsfield, Massachusetts, employs 10,300 people in 60 countries and makes resins used on products ranging from health care equipment to packaging for consumer goods.
As a top-ranked maker of petrochemicals, SABIC will be in a position to lower the plastics business raw-materials costs.
Focus on Faster Growth
GE 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 $15 billion in takeovers, including parts of health-care company Abbott Laboratories , the aerospace business of Britain's Smiths Group and privately held oil and gas field equipment maker Vetco Gray.
GE shares have lagged the major U.S. stock indexes for the past few years. They are down 0.3% for the year, at a time when the Dow Jones industrial average, of which GE is a component, is up 8.6%, near a record high.
GE shares trade at 16.6 times forecast 2007 earnings, a premium to the 15.7 times forward price-to-earnings ratio of the Dow, but trailing Honeywell's P/E of 19.9 and 3M's 18.6.
Immelt said he doesn't expect any regulatory problems getting the sale of the unit to a Saudi company approved.
"I don’t surely anticipate any issues, but we’re going to work the process, as are they, and we’ll see where it goes," he added.
Other Immelt Comments
In a wide ranging interview, Immelt also told CNBC:
- "I think NBC Universal is still well positioned strategically. I would say the base case says NBC Universal grows operating profit 10 to 15% a year. That’s not bad. And the asset gets more valuable every minute we’re sitting here."
- "I think China is making staggering progress. It’s never as fast as we would like, but having Hank Paulson as secretary treasury, there’s no business person in this country that understands China better than Hank."
- "Blackstone has some shimmer, but I’d still put our management up against anyone’s in the world."
- "For private-equity to have the same return over the next 3 to 5 years, they’re going to have to operate the heck out of these businesses, they didn’t have to do that the last five years."
- "In the end this is an operators’ world, you can win once or twice through financial savvy, you can win occasionally by being the smartest guy at the table. On average over time this is about business operations – who makes the best products, who services customers better, who globalizes the best? That’s just the way this world works."