General Electric has signed a definitive agreement to sell its GE Advanced Materials business, a maker of silicone chemicals and quartz-based products, to Apollo Management for about $3.8 billion in cash and securities.
Along with firms such as Dow Corning and Wacker Chemie, GE Advanced Materials is one of the world's largest producers of silicones. It has annual sales of about $2.5 billion and some 5,000 employees worldwide. GE will own 10% of the new company and hold $400 million in notes after the deal is complete, expected by the end of 2006.
GE Advanced Materials has two major joint ventures: GE Toshiba Silicones, formed in 1971, and GE Bayer Silicones, formed in 1998. In related transactions, GE is buying out its partners and then including the two ventures in the sale to Apollo.
GE Vice Chairman Lloyd G. Trotter says his company is selling the business to reposition its industrial segment "for faster growth and higher returns." After the sale, GE will remain in the chemicals business through its GE Plastics unit, which makes polycarbonate and other engineering plastics.
Apollo, a private investment group, is best known in the chemical industry for forming Hexion Specialty Chemicals last year by assembling several unwanted thermoset resin companies: Borden Chemical, Resolution Performance Products, Resolution Specialty Materials, and Bakelite. Hexion prepared an initial public offering of stock, but in June announced a delay due to what it called adverse market conditions.