RIYADH (Reuters) -Saudi Basic Industries Corp., the world’s largest chemical firm by market value, is considering a bid for the plastics unit of General Electric Co., a source familiar with the situation said on Monday.
“We are considering a bid for GE’s plastics unit,” the source, who asked not to be identified, said. “It’s one of many options on offer in the international market which deserve to be examined,” the source added.
SABIC had no official comment.
A deal for GE’s plastics unit could be worth up to $12 billion, the Financial Times reported on Monday.
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 U.S. and European firms.
Last year, SABIC agreed to buy the European bulk chemicals unit of U.S.-based Huntsman Corp for $700 million.
GE said in January it was considering the sale of its plastics division as it focuses on higher-margin growth businesses.
The auction, run by Goldman Sachs, is unique in that the bank is prohibiting the four main bidders — all private equity groups — from teaming up with each other.
Apollo Management, Blackstone Group, Carlyle Group and Kohlberg Kravis Roberts & Co. have signed agreements promising not to team up with each other, two sources involved in the process have told Reuters.
But at least three of the four already have partners, according to sources close to the process: Carlyle is linking up with Texas Pacific Group, KKR is teaming up with Bain Capital, and Blackstone plans to partner with Koch Industries.
GE Plastics makes plastics for automotive parts, computer enclosures, compact disks, telecoms equipment and construction materials.
The auction for GE Plastics comes amid concern that profitability of the unit is eroding, and that the price tag on any deal may be shrinking.