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GE Focuses on Growth and Higher Returns with Sale of GE Advanced Materials Business to Apollo Management, L.P.; Move Supports Repositioning of Industrial Portfolio for Stronger Performance

Published on 2006-09-15. Author : SpecialChem

FAIRFIELD, Conn -- GE (NYSE: GE) announced that it has signed a definitive agreement to sell GE Advanced Materials (Silicones & Quartz) to Apollo Management, L.P., a private investment firm in a deal valued at approximately $3.8 billion in cash and securities. Upon completion of the transaction, GE will receive a 10% ownership stake in the new company and hold $400 million of notes. The closing of the transaction is subject to customary conditions, including the receipt of regulatory approvals, and is expected to occur before the end of 2006.

"Today's announcement is another big step in repositioning the Industrial segment for faster growth and higher returns," said Lloyd Trotter, GE vice chairman and president and CEO of GE Industrial. "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 is a global leader in a wide range of high-technology materials solutions," said Joshua Harris, a founding partner of Apollo. "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."

GE Advanced Materials is a $2.5 billion supplier of silicone-based products, silanes, sealants, urethane additives and adhesives; and high-purity fused quartz and ceramics materials. It is headquartered in Wilton, Conn. and employs 5,000 people in 38 locations worldwide.

GE Advanced Materials has two major joint ventures - GE Toshiba Silicones (GETOS), formed in 1971, and GE Bayer Silicones (GEBS), formed in 1998. In two related transactions, GE announced that it has reached definitive agreements with Toshiba and Bayer to acquire 100% of their respective joint venture equity stakes. GETOS and GEBS will become wholly owned by GE and will be included in the acquisition by Apollo.

GE will receive net proceeds from the deal of approximately $2 billion after the purchase of minority partners' interest, taxes and deal expenses. The effect on operations will be modest and will be principally offset by restructuring.

Wayne Hewett, who currently leads the Advanced Materials business for GE, will serve as president and chief executive officer of the new business, which will be renamed upon completion of the transaction.

"Wayne and his leadership team bring years of experience to their new roles and are highly respected in the industry," added Trotter. "We wish them the very best of success in their new company and we look forward to working together as supply chain partners."

GE (NYSE: GE) is a diversified technology and services company dedicated to creating products that make life better. From aircraft engines and power generation to financial services, medical imaging, television programming and plastics, GE operates in more than 100 countries and employs more than 300,000 people worldwide.

Apollo Management, founded in 1990, is a recognized leader in private equity, debt and capital markets investing. Since its inception, Apollo has successfully invested over $16 billion in companies representing a wide variety of industries, both in the US and internationally. Apollo is currently investing its sixth private equity fund, Apollo Investment Fund VI, L.P., which along with related co-investment entities, represents approximately $12 billion of new capital.

Caution Concerning Forward-Looking Statements

This document contains "forward-looking statements" - that is, statements related to future, not past, events. In this context, forward-looking statements often address our expected future business and financial performance, and often contain words such as "expects," "anticipates," "intends," "plans," "believes," "seeks," or "will." Forward-looking statements by their nature address matters that are, to different degrees, uncertain. For us, particular uncertainties which could adversely or positively affect our future results include: the behavior of financial markets, including fluctuations in interest rates and commodity prices; strategic actions, including dispositions; future integration of acquired businesses; future financial performance of major industries which we serve, including, without limitation, the air and rail transportation, energy generation, media, real estate and healthcare industries; unanticipated loss development in our insurance businesses; and numerous other matters of national, regional and global scale, including those of a political, economic, business, competitive and regulatory nature. These uncertainties may cause our actual future results to be materially different than those expressed in our forward-looking statements. We do not undertake to update our forward-looking statements.

Source: GE Advanced Materials

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