Greyhound to Buy Purex’s Consumer Division
Greyhound Corp., the bus line operator that also produces Armour and Dial products, said Thursday that it will purchase the consumer products division of Lakewood-based Purex Industries Inc. for $264 million.
The division, which markets such household goods as Purex bleach and Sweetheart soap, will be combined with Greyhound’s Armour-Dial subsidiary, which manufactures a broad line of soaps and toiletries as well as canned meat.
Phoenix-based Greyhound said the combined entities will have about $1 billion in annual sales, thus doubling the current size of Armour-Dial.
The consumer products division, Purex’s largest, operates 24 plants and employs 2,800 people nationwide. Purex will retain its industrial chemical and aviation divisions.
“This is a very exciting . . . expansion move for Greyhound,” said John W. Teets, Greyhound chairman and chief executive. “The Purex consumer products division fits all our criteria, meshing extremely well with the product lines, distribution system and marketing organization of Armour-Dial.”
The purchase requires approval of federal antitrust officials.
On the New York Stock Exchange on Thursday, Greyhound shares closed off 37.5 cents at $28.25 as 130,600 shares changed hands. Purex is privately held.
Officials from both companies said it was premature to comment on whether there will be layoffs or other changes at Purex, but they added that “it is expected that Purex personnel and management will play an important role in the combined operations.”
Purex Chairman and Chief Executive John T. Gurash said Greyhound will take over the Purex consumer products office building in Carson, about five miles from Purex’s Lakewood headquarters. Some Purex operations may move as a result of the acquisition, Gurash said, but he declined to identify them.
Purex’s consumer products division had revenue of about $500 million in 1984, according to company officials.
When asked whether the division was profitable last year, Gurash replied: “Greyhound wouldn’t have bought it if it wasn’t.”
Analysts familiar with both companies saw the acquisition as a possible outgrowth of the 1982 leveraged buy-out in which all of Purex’s publicly held shares were purchased by an investment group, including top Purex managers, for $357 million.
“(The investment group) could be piecemealing it (Purex) . . . in an effort to pay off the debt they incurred when they bought out the public (shareholders) in 1982,” said Sharon Kalin, a New York risk arbitrageur who assesses merger and acquisition deals. “I would expect that they might consider selling out the whole company and, of course, make a profit.”
Gregory Kieselmann, an analyst for the Los Angeles-based investment firm of Morgan, Olmstead, Kennedy & Gardner Inc., added: “It looks like they are more or less liquidating Purex and will sell the rest of it when they find an attractive buyer.”
Asked to comment on the analysts’ speculation, George Evans, Purex executive vice president of consumer products, said: “As far as I know, that is not the plan.”
Kieselmann said the deal, for Greyhound, “gives them a much broader product line and perhaps the critical mass to become a major factor in household products in this country.” Other Purex consumer products include Brillo soap pads, Trend detergent, Dutch detergent, Sta-Puff, Fleecy fabric softeners and Ellio’s frozen pizza.
A spokesman for Greyhound said the Justice Department’s antitrust review would likely focus on the two companies’ similar ammonia products: Greyhound’s Parson’s ammonia and Purex’s Bo-Peep brand.
The Hart-Scott-Rodino Antitrust Act gives federal regulators 30 days to examine prospective mergers before they are completed.
