LONDON, March 26 (Reuters) - Saudi Basic Industries Corp. (SABIC), the world's largest chemical firm by market value, is lining up a bid for the plastics unit of General Electric Co. (GE.N) in a deal that could be valued at up to $12 billion, the Financial Times reported.

The Saudi company 2010.SE has appointed Citigroup (C.N) to prepare an indicative offer ahead of the first round of an auction for GE Plastics next month, the newspaper said on Monday, without citing sources.

The auction, run by Goldman Sachs, is unique in that the bank is prohibiting the four main bidders -- all private equity groups -- from teaming up with each other.

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Apollo Management, Blackstone Group [BG.UL], Carlyle Group [CYL.UL] and Kohlberg Kravis Roberts & Co. [KKR.UL] have signed agreements promising not to team up with each other, two sources involved in the process have told Reuters.

But at least three of the four already have partners, according to sources close to the process: Carlyle is linking up with Texas Pacific Group [TPG.UL], KKR is teaming up with Bain Capital, and Blackstone plans to partner with Koch Industries.

GE Plastics makes plastics for automotive parts, computer enclosures, compact disks, telecoms equipment and construction materials.

The auction for GE Plastics comes amid concern that profitability of the unit is eroding, and that the price tag on any deal is shrinking.