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Waiting for tomorrow's mail.

Waiting For Tommorrow's Mail

It's getting so it's exciting and dangerous to come into work or pick up the phone these days. While all of the news that's been happening in our little business in the past few months certainly makes it easy to fill up the pages of Nonwovens Industry or the EXECUTIVE REPORT newsletter, it is also a bit unsettling.

What sparked this concern is the announcement in mid-January that now Scott Nonwovens, one of the stalwarts of the U.S. nonwovens industry, is being offered for sale by its parent company, Scott Paper. The reasons given (detailed in Top of the News on page 6) are basically that the corporate parent needs the money and Scott Nonwovens is one of the shining lights in its worldwide empire. Scott Nonwovens never did fit into the core business of the paper giant anyway, making it a prime candidate for divestiture.

All of this Scott Nonwovens news came about just a few days after the resolution of the year-long effort by German producer Corovin to sell itself to the highest bidder. In that case, too, the corporate parent company (BPB Industries, U.K.) had said the reason it wanted to sell the nonwovens business was because it did not fit well with its primary businesses. BPB, like Scott Paper now, figured the nonwovens operations could bring in some much needed cash. Whether it did or not will probably only be known to the principals involved.

All of this selling and buying can be seen in two ways. The first, which the industry probably prefers to discount, is that nonwovens businesses are a drain on the resources of companies no longer interested in diversifying as the tough economic times of the 1990s loom ahead. Nonwovens by its very nature is a capital and technology intensive business that requires the commitment of a corporate parent with deep pockets.

The second way to look at this is that the industry is restructuring to put the power in the hands of companies willing to spend this money. And because of this there remains a healthy market for the compares that are put on the block. European and Japanese companies are looking to come into the U.S. and U.S. companies are looking for counterparts with which to merge overseas. It makes for a good seller's market and that's what BPB and Scott Paper have done already or are now looking to take advantage of.

Actually, there is a third explanation, sort of a combination of the first two that is probably closest to the mark. Yes, there are companies such as Scott Paper and BPB that no longer want to spend the money necessary to keep their off-spring competitive. But for each of them there is a Holzstoff, a Freudenberg--and whoever buys Scott Nonwovens--that view the nonwovens industry as a potential profit center in a bleak economic picture. The purchase of Corovin by Stohr, a European textiles company looking for a way into nonwovens, and the offering of Scott Nonwovens by its parent, a worldwide paper company looking to get out of nonwovens, proves that both sides of the story still hold true.

We thought there might be a little break in the action once the Corovin matter was settled last month, but the news a week later of the Scott Nonwovens availability took care of that respite. We can hardly wait until tomorrow's mail to see what else is going to happen.
COPYRIGHT 1991 Rodman Publications, Inc.
No portion of this article can be reproduced without the express written permission from the copyright holder.
Copyright 1991 Gale, Cengage Learning. All rights reserved.

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Title Annotation:anticipating mergers in the nonwoven fabrics industry
Author:Jacobsen, Michael A.
Publication:Nonwovens Industry
Article Type:editorial
Date:Feb 1, 1991
Words:580
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