NEW HAVEN, Conn. (AP) – General Electric Co. said Monday it will sell its plastics division for about $11.6 billion in the latest move to reshape one of the world’s largest companies.

GE said it would use the proceeds from the sale to petrochemicals manufacturer Saudi Basic Industries Corp. 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 Fairfield-based conglomerate.

GE Chairman and Chief Executive Jeff Immelt called the long-expected divestiture “another important step” in the company’s strategy to sell slower growth and volatile businesses such as insurance and invest in high-growth, high-technology businesses, such as health care and water processing technology.

“We’ve exited businesses that are volatile, like plastics, and we’ve got a good run ahead of us,” Immelt said Monday on cable channel MSNBC, which is operated by GE subsidiary NBC Universal.

GE’s shares closed Monday at $37.10, up 14 cents. The stock has traded between $32.06 and $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.

Robert Schenosky, an industrial analyst with Jefferies & Co. in New York, welcomed the sale and said he would like GE to consider more divestitures of businesses such as lighting and appliances. By shrinking, GE can make meaningful acquisitions to grow the company faster, he said.

“I think Mr. Immelt fully understands what he needs to do to try to reaccelerate the growth of the portfolio,” Schenosky said.

GE’s plastics division dates to 1930, resulting directly from Thomas Edison’s experiments with plastic filaments for light bulbs in the 1890s. It grew into a significant GE venture where both Immelt worked before becoming CEO.

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

The division has struggled since 2004 due to rising costs of natural gas and raw materials such as benzene. Profits for the division fell by 22 percent in 2006, to $674 million.

SABIC said it intends to grow the business globally and is not planning work force reductions, said Bronwyn Wallace, a company spokeswoman.

“This business is complementary to our existing business without any overlaps,” said Mohamed Al-Mady, vice chairman and chief executive of SABIC.

The deal is expected to close in the third quarter. Afterward, Brian Gladden, who 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.