General Electric Co. (GE) said Monday it will sell its GE Plastics division to petrochemicals manufacturer Saudi Basic Industries Corp. for about $11.6 billion.

GE said it would use the proceeds primarily to increase its planned 2007 stock buyback program. It now expects to buy back $7 billion to $8 billion in stock, up from the previous plan of $6 billion. The deal is expected to create a net gain, after taxes, of $1.5 billion for the conglomerate.

GE Chairman and Chief Executive Jeff Immelt called the long-expected divestiture "another important step" in the company's strategy to dispose of some businesses and invest in high-growth, high-technology businesses.

"This sale is the right move at the right time for GE shareowners," Immelt said. "We received a good price from a respected global company in a highly competitive bidding process. We will use the proceeds to fund the stock buyback and strengthen the company through restructuring."

Appearing Monday morning on MSNBC, which is owned by GE, Immelt said the sale was good for GE investors.

"We've exited businesses that are volatile, like plastics, and we've got a good run ahead of us," he said.

GE's shares traded Monday morning at $37.18, up 22 cents. The stock has traded between $32.06-$38.49 over the past year.

Mark Demos, portfolio manager for Fifth Third Asset Management in Minneapolis, said the sale price came in at the upper end of expectations.

"I think it's a very good price for that asset," Demos said.

The deal is expected to close in the third quarter. Afterward, Brian Gladden, who currently serves as vice president of GE Plastics' resin business, will become president and chief executive of the new business, which Saudi Basic Industries will rename.

Charlene Begley, the current president in chief executive of GE Plastics, will move to a corporate role focused on closing the deal and will report to Immelt.

Pittsfield, Mass.-based GE Plastics supplies plastic resins used in industries such as automotive, healthcare and consumer electronics. It employs 10,300 people and GE values the business at about $6.65 billion.