U.S. Industries Inc. will build on its Jacuzzi and Ames yard and patio product lines by adding Sunbeam outdoor furniture.
U.S. Industries agreed to pay about $84.5 million for most of Sunbeam Corp.'s outdoor furniture business, including the Stanley, N.C., plastic furniture molding facility Sunbeam acquired from Rubbermaid Inc. in 1994. They expect to complete the deal in early March.
Sunbeam's plastic, metal and wood furniture complements U.S. Industries' Jacuzzi swimming pools, hot tubs and related products and Ames garden tools. Jacuzzi Outdoor Products Inc. will acquire the Sunbeam business but U.S. Industries may split it up among its various subsidiaries ``where the pieces fit,'' U.S. Industries spokeswoman Diana Burton said from her firm's headquarters in Iselin, N.J.
Sunbeam's outdoor furniture business had a slight operating profit last year on sales of about $205 million. U.S. Industries aims to get a 20 percent return on capital from the business within three years.
``[The business] has a few warts but it's the kind of thing we can fix up,'' said Burton.
Sunbeam itself already has sunk more than $28 million into the business in the past few years to modernize and streamline production and boost injection molding capacity at Stanley.
A competitor indicated U.S. Industries has a tall order to fill to meet its furniture return target.
``There is a lot of pressure on [profit] margins from U.S. competitors and imports,'' said John Fravel, president and chief executive officer of Syroco Inc. of Peabody, Mass.
Jim Roenitz, Bemis Co.'s vice president in charge of casual furniture, said he expects Jacuzzi, a high-end products company, will help bring price stability to the casual furniture market.
U.S. Industries will get plants in Nacogdoches, Texas; Paragould, Ark.; Waynesboro, Ga.; Sarasota, Fla.; and Stanley. It also gets rights to Sunbeam and Samsonite furniture trade names.
Burton said it is too early to know if her firm will consolidate acquired plants.
Ames Lawn & Garden Tools Co. is its main injection molding subsidiary. Ames' major plant is at its headquarters in Parkersburg, W.Va., but it also does molding in Ohio. Ames' annual sales are about $220 million to $250 million.
Jacuzzi Inc. of Walnut Creek, Calif., diversified from bath products into swimming pools last year. It mainly thermoforms and processes glass-reinforced plastic. Its sales run about $300 million to $350 million per year.
U.S. Industries will not acquire Sunbeam's Portland, Tenn., furniture plant. Sunbeam closed it last year and will sell the plant separately. Sunbeam put a $120 million value on the sale of its outdoor furniture unit.
Spokesman John DeSimone said that value includes accounts receivable, which Sunbeam will keep, U.S. Industries' $84.5 million payment, and sale of other assets.
Sunbeam of Delray Beach, Fla., announced last fall it wanted to sell the noncore, outdoor furniture business in a major restructuring program begun after Albert Dunlap joined the firm as chairman and chief executive officer.
DeSimone said the outdoor furniture sale will complete the restructuring program. Sunbeam will keep running its large, consumer products injection molding plant in Hattiesburg, Miss., DeSimone said.