Continuing an extraordinary trend of corporate restructuring and divestiture, Amoco Chemical Co. announced Jan. 30 it is investigating strategic possibilities for its Amoco Foam Products Co. unit, including its possible sale. The firm has retained CS First Boston Corp. to study financial and strategic opportunities. David Polk, a spokesman for the Chicago-based parent company, said that he could not comment further until the study is completed in several months.
``It is not that Amoco Foam is not profitable,'' Polk said. ``It is very strong, but we think it would be wise to consider the options.''
Amoco Foam of Smyrna, Ga., makes expanded polystyrene foam cups, meat trays, and plates for meats and poultry, plus industrial products such as foam insulation board used in residential and commercial construction. The firm re-ported 1995 sales of $288 million.
The Amoco moves come in the wake of several other mega-mergers, acquisitions and divestitures in the packaging industry, beginning with the purchase of Mobil Chemical Co.'s Plastics Division by Tenneco Inc.'s subsidiary, Packaging Corp. of America. That was followed in January by James River Corp.'s announcement that it would divest its plastics film business, and Borden Inc.'s decision to place its packaging and technical film units on the sale block.
``As in the cases of Borden and James River, Amoco is [taking a cue from] the Tenneco/Mobil action and looking for a return to its key business of oil, gas, and petrochemical production and exploration,'' said Tim Burns, president of Cranial Capital Inc., a Cleveland packaging industry research and advisory firm.
``I think you're seeing the trend with the big oil and gas companies with this sort of smaller business that asks, `How much value do we bring now to what was once a logical extension of the petrochemical field?'*''
Burns noted that Amoco Foam would benefit from acquisition by a company that had broader involvement in the packaging industry and specifically, a company in food packaging.
``Someone, for instance, that had involvement with polystyrene packaging already, or with films or foil for that matter, might give a wider distribution potential, and might be a better fit,'' he said.
His analysis echoed that of Enrique Sosa, Amoco's chemical sector executive vice president.
``Though it has become a successful business as part of Amoco Corp., we feel that Amoco Foam may well be a better strategic fit for another company,'' he said. ``Our work with CS First Boston will help us make that determination.''