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General Electric attempts to find a buyer for its plastics subsidiary

In another major move, the company agrees to acquire Vetco Gray to take advantage of energy sector growth potential.

January 09, 2007|From Bloomberg News and the Associated Press

General Electric Co. is seeking bids for its GE Plastics unit and may be offered as much as $10 billion, people with direct knowledge of the auction said Monday.

The bids may come from private equity firms, said the people, who asked not to be identified because the talks are private. GE spokesman Russell Wilkerson declined to comment.

A sale would free GE Chief Executive Jeffrey Immelt of one of the drags on GE's recent earnings. He said at a Dec. 13 investor meeting that the Fairfield, Conn.-based company's plastics unit was "in a difficult spot" and that he was not necessarily committed to waiting for its fortunes to improve.

Separately, GE said Monday that it agreed to buy oil services company Vetco Gray for $1.9 billion from a group of private equity funds.

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

The business, which is forecast to generate more than $1.6 billion of sales in 2006, has 5,000 employees with key centers in Houston, Britain, Norway and Singapore.

GE's current oil and gas business has about 5,000 employees, so the acquisition would double its workforce in the business. GE's oil and gas business had about $3.6 billion in revenue in 2005.

GE expects demand for energy to increase by 50% by 2025, mostly driven by emerging economies, said GE spokesman Peter O'Toole. "We just don't see it abating anywhere."

Shares of GE slipped a penny to close at $37.55.

In another energy deal, oil and gas producer Forest Oil Corp. moved to expand in the booming Rockies and Texas regions, announcing a $1.5-billion cash-and-stock deal to acquire Houston Exploration Co.

The combined company would have proved reserves of about 2 trillion cubic feet of natural gas in the Rockies, Texas and the Arkoma Basin in Arkansas and Oklahoma.

About 70% of the reserves would be natural gas. Daily production would be about 520 million cubic feet of gas equivalent.

The deal would add more than 3,200 drill sites to Denver-based Forest Oil's inventory, said H. Craig Clark, Forest president and chief executive.

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