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GE Puts Apollo In A Sticky Situation

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We like this story just because it is a good example of the direction of so much that is going on in corporate finance—old school manufacturing companies going private while spanking new tech companies reach out to the public capital markets. Now when the horse gets too old to run, he still might be made into glue. But the glue factory will probably be owned by a private equity firm.

General Electric Co., the world's second-biggest company by market value, agreed to sell its unit that makes adhesives and sealants to Apollo Management LP for about $3.8 billion and use the proceeds to invest in faster- growing divisions.
The sale of GE's advanced materials division, announced by the company in a statement today, continues Chief Executive Officer Jeffrey Immelt's plan to divest slower-growing units and put resources into areas like media, security and healthcare. For New York-based Apollo, led by Leon Black, the deal adds to the private-equity firm's more than $16 billion in acquisitions since its formation in 1990.
“Long-term, this is a good thing; it removes a commodity based-thing from GE's portfolio,'' said Peter Bates, an analyst at T. Rowe Price in Baltimore, which owns more than 120 million GE shares. “GE is continuing with the Immelt philosophy of getting into technology-focused areas to build and focus on organic growth.”

GE to Sell Materials Unit to Apollo for $3.8 Billion [Bloomberg]



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