General Electric Co. said Thursday it agreed to sell its advanced materials business for about $3.8 billion in a move aimed at boosting growth in its industrial division.
Private equity firm Apollo Management L.P. will pay cash and securities for the unit, which includes silicone and quartz materials used in consumer products and industrial applications.
GE, based in Fairfield, Connecticut, said the sale includes the stakes of its joint venture partners in GE Toshiba Silicones and GE Bayer Silicones, which it had purchased and sold to Apollo.
The advanced materials business, based in Wilton, Connecticut, has annual revenue of $2.5 billion. It supplies silicone-based products, silanes, sealants, urethane additives and adhesives, whose applications range from shoe inserts to car tires and hair conditioner, and industrial uses like integrated circuits and biomedical devices.
Its fused quartz and ceramics materials are used in fiber optics and lighting, as well as glass-making, welding and plastic molding, among other uses.
As part of the transaction, Germany’s drugs and chemicals group Bayer said that it had sold its 49.9 percent stake to GE for $603 million (475 million euros).
“We negotiated an attractive price for the deal, and we will use the proceeds to fund growth and restructuring in our industrial businesses,” Lloyd Trotter, GE Vice Chairman and CEO of the Industrial group, said in a statement.
GE will have a 10 percent stake in the new company, which will be renamed, and also have $400 million in notes. Wayne Hewett, who currently leads the business, will become president and CEO of the new company, GE said.
GE said it would have net proceeds from the deal of about $2 billion after the purchase of these stakes, taxes and deal expenses. The deal is expected to close before the end of 2006.