GE Plastics bidders narrow after 1st round-sources

NEW YORK, April 25 Wed Apr 25, 2007 6:49pm EDT

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NEW YORK, April 25 (Reuters) - The field of bidders for General Electric Co.'s (GE.N) plastics division has narrowed as the auction of the roughly $10 billion unit moves into the second stage, sources familiar with the situation say.

Private equity firms Bain Capital, Kohlberg Kravis Roberts & Co. [KKR.UL] and TPG [TPG.UL] are no longer involved in the process, these sources told Reuters, with Carlyle Group's status unclear.

Blackstone Group [BG.UL] remains in the bidding, separate sources say. Apollo Management appears to have advanced to the second round as well, sources say.

At least two corporate buyers -- Saudi Basic Industries Corp. (SABIC) 2010.SE, the world's largest chemical firm by market value, and Basell BASL.UL, the Dutch petro-chemical maker -- are also expected to submit second-round offers for the division, according to some of the sources.

It was unclear whether Koch Industries, the world's largest private company, which Reuters previously reported had partnered with Blackstone, was still in the running.

Sabic declined comment. Koch and Basell were not immediately available for comment. All of the private equity firms mentioned declined comment.

Fairfield, Connecticut-based GE put the plastics business on the auction block in January.

GE's Chairman and Chief Executive Jeff Immelt said on Wednesday that the effort to sell GE Plastics is on track and the company expects a deal to close in the third quarter.

"Plastics looks good," Immelt said at GE's annual meeting in Greenville, South Carolina. "We've had a lot of interest in it. I'm pretty optimistic about how the whole process is going and what the outcome will be.

"I think there will be a second-quarter announcement," he added. "We'll probably close the deal in the third quarter. The momentum is good."

The unit, which makes plastics for automotive parts, computer enclosures, compact disks, telecoms equipment and construction materials, faced margin pressure in 2006 as a result of the rising price of benzene, a key raw material.

Analysts have said the plastics business could be worth around $10 billion.

The auction, run by Goldman Sachs (GS.N), is unique in that the bank prohibited the deal's four main bidders from teaming up with each other. Teaming up among buyout firms has been a common practice in the industry, and one that critics say reduces competition.

The four main bidders for GE Plastics were Apollo, Blackstone, Carlyle and KKR, sources previously told Reuters in March. The firms signed agreements promising not to team up with each other, sources said, but were allowed to bring in their own partners.

Carlyle linked up with TPG, KKR joined with Bain, and Blackstone partnered with Koch Industries, sources said. To read that story please click on [ID:nN06390325].

It remains unclear if Apollo has a partner. It is also unclear whether Koch and Blackstone are still working together, or whether Blackstone was bidding with another party. (Additional reporting by Souhail Karam in Riyadh and Scott Malone in Greenville)

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