GE sells Advanced Materials to Apollo for $3800 million

Fairfield, Connecticut - General Electric (GE) is to sell its GE Advanced Materials business, which includes silicones and quartz operations, to private investment group Apollo Management LP.

The deal is valued at about $3800 million in cash and securities and is expected to be finalised before the end of the year, subject to regulatory and other approvals.

GE said it will retain a 10-percent stake in the new company, which will be renamed, and hold $400 million in notes.

"Today's announcement is another big step in repositioning the industrial segment for faster growth and higher returns," Lloyd Trotter, GE vice chairman, said.

"We negotiated an attractive price for the deal, and we will use the proceeds to fund growth and restructuring in our industrial businesses."

Advanced Materials has annual sales of $2500 million in silicone-based products, employing 5000 people in 38 locations worldwide.

"Advanced Materials is a global leader in a wide range of high-technology materials solutions," Joshua Harris, a founding partner of Apollo, said.

"It has a world class management team, a robust technology portfolio and strong research and development. This combination makes it an extremely valuable asset and gives Apollo a solid foundation to profitably grow this business and create long-term value."

The GE subsidiary has been involved in two major joint ventures - GE Toshiba Silicones (GETOS), formed in 1971, and GE Bayer Silicones (GEBS), formed in 1998.

Both joint ventures are now wholly-owned by GE and will be included in the Apollo deal.

GE predicted net proceeds from the deal of about $2000 million, after the purchase of minority partners' interest, taxes and expenses.

The conglomerate said that the effect on operations will be modest and be offset by restructuring.

Wayne Hewett, current head of GE Advanced Materials, will serve as president and chief executive officer of the new business.