Foamex International Inc. and Leggett & Platt Inc. have signed a letter of intent to exchange their carpet cushioning and polyurethane foam assets, and are discussing other possible pacts.
Details are sketchy because the deal is in the very early stages and confidentiality clauses prohibit the firms from discussing the proposals, a Leggett and Platt spokesman said.
At this point, Foamex plans to swap its carpet cushion business for Leggett & Platt's polyurethane foam operation and an undisclosed cash payment, according to a Foamex spokeswoman.
The companies also are reviewing other potential agreements, including the sale of scrap and prime foam and sharing of facilities, on an interim basis, the companies indicated.
Carthage, Mo.-based Leggett & Platt's polyurethane foam business manufactures and distributes components for bedding and furniture, as well as consumer products, while Foamex's carpet cushion unit makes and distributes prime, rebond, felt and rubber underlay goods.
The proposed exchange is subject to the satisfactory completion of due diligence by each company, along with the normal documentation and closing conditions, which includes regulatory approval, Foamex said in a prepared statement.
``It's far too early to tell whether this will come off or not,'' the Leggett & Platt spokesman said. Neither side said when they thought the transaction might close or what impact the exchange of businesses and other pacts would have on their operations.
Foamex's Foam Products business is the firm's largest operation, another company spokeswoman said, while the Carpet Cushion Products unit ranks third among its four major segments. Automotive Products is Foamex's second biggest business and Technical Products is fourth.
The Foam Products division recorded sales of $117.5 million for this year's first quarter, down 7.4 percent from the 2001 period. Automotive Products' revenues for the quarter were $104.4 million, up 23.5 percent from the year before.
Its Carpet Cushion Products unit had sales of $52.8 million, down 1.6 percent from 2001, while Technical Products' first-quarter revenues came in at $30.9 million, up 11.3 percent from last year.
Leggett & Platt is a diversified global manufacturer of engineered components and products for a wide range of industries. It has 29 business units operating out of five major segments, more than 300 facilities in 18 countries and a work force of about 31,000. The firm has completed over 100 acquisitions in the last five years.
Its primary raw materials include steel and aluminum, followed by chemicals, wood and plastics. The firm, with annual sales of about $4 billion, makes few products that require polyurethane and rubber.
Foamex is a large producer of comfort cushioning for the bedding, furniture, carpet cushion and automotive markets. It also manufacturers high-performance polymers for diverse applications in the industrial, aerospace, defense, electronics and computer industries as well as residential filtration and acoustical applications.
The Linwood-based company is in the midst of a cost reduction and long-term profit enhancement plan, called Project Transformation, put in place at the beginning of 2002. Foamex recently closed two of its 67 plants and will shutter six more and cut about 10 percent from its work force of 6,000 by the end of 2002.
Under Project Transformation, the company intends to achieve its consolidation goals without trimming capacity, primarily by converting manufacturing to Foamex's proprietary Variable Pressure Foaming technology.