Saudi Basic Industries Corp. has completed its $11.6 billion purchase of GE Plastics - but only after altering the deal's financing because of a tough market for corporate credit.
The purchase, announced in May, became official Aug. 31. Sabic, of Riyadh, Saudi Arabia, is a petrochemicals firm majority-owned by the Saudi Arabian government. Pittsfield, Mass.-based GE Plastics, a global leader in polycarbonate, ABS and other engineering resins, now will be known as Sabic Innovative Plastics.
Sabic had planned to fund the deal in part through $2.8 billion in senior unsecured bonds, according to an Aug. 15 MarketWatch report. But the amount was lowered to $1.5 billion, partly as a result of U.S. subprime lending fallout weakening the corporate bond market. MarketWatch also said Sabic increased the bank loan portion from $5.4 billion to $6.6 billion.
Sabic officials could not be reached to confirm that report. GE Plastics had sales of $6.7 billion in 2006 and employs more than 10,000 worldwide. Brian Gladden, an 18-year GE veteran, will serve as president and chief executive officer of Sabic Innovative Plastics.
Sabic is buying the unit from General Electric Co. of Fairfield, Conn. In a news release, GE said it would use proceeds from the sale to complete a $27 billion stock buyback program.
In a news release, Mohamed Al-Mady, Sabic vice chairman and chief executive officer, said the firms were able to complete the deal ``on time, despite the prevailing turbulence in the global credit markets'' because of Sabic's reputation in global financial and capital markets, and the sound business profile of Sabic Innovative Plastics.