Foamex International Inc. is making a bid to become a billion-dollar foamer.
The Linwood, Pa.-based leader in polyurethane foam products announced Dec. 8 it signed a definitive agreement to buy one of its larger competitors: Crain Holdings Corp., which owns Crain Industries Inc. of St. Louis.
Foamex generated 1996 sales of $926.4 million from its carpet cushion, cushioning, automotive and technical foam businesses. Crain — estimated by some to be the No. 3 U.S. foamer — sold $306.1 million worth of foam products to the furniture, bedding and carpet industries in 1996.
The proposed purchase price of $213 million includes the assumption of $100 million of Crain's debt.
Both firms' officials could not be reached for comment by press time, so there is no word yet on the fate of Crain's 1,770 worker or possible plant consolidations while regulatory agencies scrutinize the deal.
Foamex has closed more than a dozen facilities in recent years as part of cost-cutting efforts. It operates 59 manufacturing, sales and distribution facilities in North America and Asia — 15 of which are pouring plants. Crain has 24 U.S. plants, according to its 1996 annual report.
Foam products are very sensitive to shipping costs because of their low weight-to-volume ratio. That means foam companies like to have manufacturing plants near their customers. That also means Foamex and Crain are likely to have plants near each other vying for the same customer base.
One industry source, who declined to be identified, said there were as many as 50 U.S. slabstock foam firms 20 years ago. That number, about 25 now, could be 23 by the start of 1998, the source said.
Foamex's shares traded near $10 each on Nasdaq before and after the news. Standards & Poor's issued a statement Dec. 10 essentially blessing the union, but added the debt-financed acquisition would ``elevate financial risk.''
Hicks, Muse, Tate & Furst Inc. of Dallas owns Crain.