General Electric Co. said Monday it will sell its GE Plastics business to Saudi Basic Industries Corp., or Sabic, in an $11.6 billion cash-and-debt assumption deal. GE will receive aftertax proceeds of $9 billion, which will be used mainly for a “re-launch” of its current stock buyback plan, “increasing the 2007 planned share repurchase from $6 billion to $7 to $8 billion,” GE said. The deal will generate an aftertax gain of $1.5 billion, which GE will use to fund restructuring across its businesses.
How nice for GE. How nice for GE shareholders.
And this Forbes item describes the love between GE and the Saudis:
Analysts expected SABIC [the Saudi entity buying GE Plastics] to be the stronger contender in the auction for GE Plastics because of GE’s close ties to the Saudi government, according to The Associated Press.
GE has billion-dollar contracts to sell gas turbines for new power plants in Saudi Arabia and is opening a medical-equipment manufacturing plant there. Saudi Arabia is GE Healthcare’s biggest market in the Middle East, and “GE Day” was established in the kingdom on April 4, 2006.
Ooo! GE Day! Read about the 2006 celebration here. O.M.G.
Anyway, nice for GE shareholders, but not for Ohio’s pensions that have investments in GE should Ohio (not federal) HB 151 be passed as law. HB 151 is the state bill that seeks to force those pensions to divest their investments in companies that do business in Iran. And GE has contracts in Iran. (FYI: The Columbus Dispatch wrote an editorial against the bill just over a week ago.)
Funny, actually – not so funny thing is, State Reps. Josh Mandel and Shannon Jones (Mandel is my state rep) have said that although they own GE stock, they don’t have a problem with still owning it while asking the state pensions to give it up. And with sales like the one to the Saudis, who would want to sell their GE stock, eh?
But it is exactly sales like this, of a GE subsidiary to the Saudis, that highlights the slippery slope of saying one thing and doing another. At the very least, if the elected officials so believe in this divestment effort that they want to foist it on retired Ohioans and future Ohio retirees, then they should sell their GE stock and set an example of what it is they pronounce as otherwise morally wrong.
And, just to be clear: No one is contending that we should be rushing to invest in GE or any profitable corporation with money in Iran, when we know and when we are able to control such investments.
What is disconcerting is the double standard that’s being dismissed as irrelevant and the extent to which Ohio’s legislators are willing to forfeit Ohioans’ money while refusing to forfeit their own. If you want to make a convincing case, this isn’t a strategy that’s going to help you.