Can GE Dump Its Albatross?

Industrials

Published: March 26, 2007 4:28 am

Late word is that Saudi Basic, the big petrochemical company may buy GE Plastics fro $12 billion.

Private equity firms looked at buying the unit, but there were concerns that the US government saw the potential bid as a special deal between the firms and GE. That seemed to have tanked the deal.

The Plastics unit brings in about $6.5 billion in revenue per year, but its margins are not up to those of most other GE businesses.

GE’s share price has been flat since management rock star Jack Welch retired in 2000, and current management must be sick of that. Selling GE Plastics is a start if the huge conglomerate want investors to believe that the company is willing to restructure to improve returns.

Other units, like NBCUniversal, seem to be a poor fit at an industrial and finance company like GE, And, consequently, it should be sold next.

Douglas A. McIntyre can be reached at [email protected] He does not own securities in companies that he writes about.

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