Apollo Management has agreed to buy GE Advanced Materials, the silicone and quartz materials producing unit of General Electric, for $3.8 billion (€3 billion) in cash and securities. GE will receive a 10 percent ownership in the new company, which will be renamed, and hold $400 million of notes.
The industrial unit, which is GE’s second-largest, makes silicone-based products used for both consumer products and industrial processes. The unit also produces fused quartz and ceramics materials used in fiber optics and lighting, glass-making and welding.
The unit is based in Wilton, Connecticut and employs 5,000 people in 38 locations worldwide. It has annual revenues of $2.5 billion.
GE Vice Chairman and CEO Lloyd Trotter said in a statement that the company had “negotiated an attractive price for the deal.” GE also said that the sale includes the stakes of its joint venture partners in GE Toshiba Silicones and GE Bayer Silicones, which it has purchased and sold to Apollo. Germany-based Bayer sold its 49.9 percent stake in the joint venture, formed in 1998, to GE for €475 million ($603 million). Japan-based Toshiba said it sold its stake in the other joint venture, launched in 1971, for ¥57 billion ($485 million)
GE chairman and chief executive Jeff Immelt is known to have a deep interest in partnering with private equity firms. On several occasions, Immelt has hosted private dinners with the heads of several major private equity firms to discuss ways of working together, according to industry sources.
Apollo has been recently active in the industrial sector. In December the firm reached a deal to buy Tyco International’s plastics and adhesives division for $975 million.