The biggest name in plastics packaging just got bigger. Tenneco Packaging, which a year ago was doing about $91 million a year in plastics sales, has the potential to do $1.5 billion this year with its purchase of competitor Amoco Foam Products Co. of Smyrna, Ga., announced June 26.
Tenneco's $310 million stock acquisition of Amoco Foam, though cementing Tenneco as a leader in expanded polystyrene dinnerware, still is dwarfed by its huge $1.27 billion purchase of Mobil Chemical Co.'s Plastics Division, announced Oct. 2.
At least one competitor predicted that the Amoco Foam purchase will receive regulatory scrutiny before it is completed.
``It's, quite frankly, incredible'' that the combination of the two sizable players would be allowed by the federal government, said Donald McCann, president of Elm Packaging Co. in Memphis, Tenn.
``Our concern is that we'll have one concern controlling the whole industry,'' said McCann, whose company, with three plants, competes against both firms in the foam packaging business. McCann said the possibility of the federal government reviewing the acquisition is quite high ``when you look at the percentage of a certain number of markets that they will control.
``Especially when you consider that with three plants, [Elm Packaging is] considered a competitor in this business. That's a professional judgment, not a legal judgment,'' he said.
Elm Packaging reported $35 million in thermoforming sales in 1995.
The deal would combine the No. 1 firm in Plastics News' 1996 ranking of North American thermoformers with the No. 3 firm. Tenneco Packaging reported thermoforming sales of about $700 million, while Amoco Foam had about $249 million in related sales.
Amoco Foam reported total 1995 sales of $288 million, mostly from thermoformed expanded polystyrene tableware and packaging, including plates, cups, carrying trays, foam-hinged lid containers and meat trays. Its sales also include industrial and residential insulating foam.
Despite the size of the thermoforming units, Tenneco spokes-man Mike Bazinet said the firm ``has no indication that there will be any delay'' in receiving Federal Trade Commission approval of the acquisition.
In addition to thermoforming, Tenneco Packaging also has substantial plastics film sales - its own plastics films packaging unit, plus the polyethylene pallet wrap, trash and T-shirt bag businesses it acquired from Mobil last year.
The acquisition is the latest step in a three-year reorganization of Tenneco from an oil and gas producer to a packaging and auto parts giant. The Evanston, Ill.-based Tenneco Packaging division also makes corrugated paper and aluminum foil.
Amoco Corp., the Chicago-based parent of Amoco Foam, decided to sell the unit to concentrate on its roots in oil, gas and energy exploration and development.
Amoco Foam has been shopping for a buyer since the beginning of 1996, when it retained investment bankers CS First Boston to look for strategic opportunities. At that time, En-rique Sosa, Amoco's chemical sector vice president, said ``Amoco Foam may well be a better strategic fit for another company.''
Dana G. Mead, chairman and chief executive officer Tenneco Packaging's parent company, Tenneco Inc. of Greenwich, Conn., noted Amoco Foam ``is one of our core strategic businesses, specialty packaging,'' and it ``exceeds our goal of a 15 percent return.''
Tenneco Packaging President Paul T. Stecko noted the Amoco purchase ``broadens our product line and customer base in the less cyclical, higher value-added specialty packaging business. It enhances our position in tableware in the growing segment of that market'' and ``facilitates our entry into the packer-processor segment with meat and poultry trays.''
Tenneco Packaging has 13,600 employees in 93 plants, while Amoco Foam has 1,600 employees in nine plants.