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GE reportedly seeks sale of plastics unit

Competition concerns may put limits on bidders

FAIRFIELD, Conn. -- General Electric Co. is seeking bids on its $10 billion plastics business, which has been hit hard by inflation in raw materials, The Wall Street Journal reported yesterday.

GE has told several private equity firms contacted about the possible sale that they could be restricted in joining other private equity bidders, the newspaper reported on its website, citing unidentified sources.

A GE spokesman would not comment.

The possible restrictions on bidders reflect concerns by the Department of Justice about a lack of competition among possible private equity buyers, the newspaper reported.

In October, the Justice Department began an antitrust probe of private equity funds, looking particularly at equity firms that team up, prompting fears among some sellers that the number of bidders and size of the bids would be limited.

GE chief executive Jeff Immelt, in a conference call with analysts in October, called GE's plastics segment "the business we really need to remain focused on."

He said higher-than-expected commodities prices pushed down margins.

The plastics unit has current estimated revenue of $7 billion. Its value is estimated at between $8 billion and $10 billion. In the first nine months of 2006, its revenue rose 1 percent, to $5 billion, but operating profit fell 13 percent, to $560 million.

GE has been shifting from commodity products such as plastic used in compact discs into higher-priced specialty materials used in autos, aviation, and healthcare. GE has developed lightweight materials including resins for car roofs, fenders, and steering wheels.

GE also said it would buy the oil services company Vetco Gray from a group of private equity funds in a $1.9 billion deal in a bid to tap into the growing global demand for energy. GE expects demand for energy to increase by another 50 percent by 2025.

Vetco Gray provides drilling and production equipment for oil and gas fields. Its owners include private equity funds Candover Partners Ltd., 3i Group PLC, and JP Morgan Partners LLC.

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