Sweetheart Cup receives deal offers Large area employer also considers taking the company public

Tenneco may be suitor

Headquarters move to Owings Mills unlikely be affected

July 09, 1996|By Sean Somerville | Sean Somerville,SUN STAFF Sun staff writer Jay Hancock contributed to this article.

Sweetheart Cup Co., one of Baltimore County's five biggest )) employers, said yesterday that it is entertaining offers from outside investors and contemplating a public offering of stock.

William McLaughlin, Sweetheart's president, said the company has recently received "unsolicited expressions of interest about investing in or seeking a combination with" privately held Sweetheart. The company's board is considering those offers as well as pursuing its original goal of taking the company public.

He declined to be more specific. "I would emphasize as a possibility that this investigation might not result in a transaction of any kind," McLaughlin said.

Sweetheart, the nation's largest maker of plastic and paper cups, plates, cutlery and ice cream cones, has about $845.5 million in annual sales.

The company employs about 8,000 in North America, including 2,200 in Owings Mills. In March, Sweetheart said it would move its corporate headquarters from Chicago to Owings Mills. At the time, the company received a package worth nearly $1.3 million from state economic development officials.

When American Industrial Partners Capital Fund bought Sweetheart in August 1993, it adopted the goals of boosting profits, shrinking the work force and spinning off a healthy Sweetheart company by 1997 or 1998. AIP turned the company around, making 1994 Sweetheart's first profitable year since 1989.

Speculation about AIP's intentions grew intense late last month when Tenneco Inc. said it would buy Amoco Corp.'s plastic container division, which makes polystyrene cups, plates, carrying trays and other products.

The $310 million purchase would increase the size of Tenneco's packaging business, the largest division of the once diverse conglomerate. The Greenwich, Conn.-based company has made no secret of its intent to expand further in the packaging business.

"Actions of companies like Tenneco are raising degrees of speculation in the industry," said McLaughlin, who told employees in a July 2 memo that the company had been approached by outside investors.

McLaughlin would not say whether Tenneco had approached AIP about buying an interest in Sweetheart Cup. "There's been speculation, but I can't confirm that," he said, adding that the company does not want to reveal any of the parties it's talking with.

Warren Hazelton, director of corporate relations for Tenneco's packaging division, said the company wouldn't comment on "any acquisitions unless or until they become a reality."

Several analysts said they had no reason to believe that Tenneco was targeting Sweetheart. "They are aggressively looking for acquisitions in the packaging sector," said Foster H. Corwith, a Dean Witter Reynolds analyst.

McLaughlin said Sweetheart, although privately held, is investigating the offers as part of its responsibility to investors that include AT&T and General Motors pension funds.

He declined to discuss in detail the nature of the transactions under consideration or the number of potential partners or suitors. But he said not making any transaction is "a significant possibility."

Earlier this year, Sweetheart received a $200,000 state training grant. The company also received a $1.08 million loan that will become a grant if the company meets several criteria set by the state economic development officials. Baltimore County committed an additional $120,000 with the same strings attached.

The criteria include the retention of 2,000 jobs, the addition of 50 upper-management positions, the investment of $30 million in the company's Owings Mills facility, installation of new printing equipment and keeping the company's headquarters in Maryland.

Whatever course the company chooses, it is not likely to result in the loss of jobs in Maryland, McLaughlin said. The move to a

Maryland headquarters is well underway, and the company is adding management jobs.

"We're going forward with all of our plans," he said. "I don't think in any case that we expect a significant change in the way we do business."

Pub Date: 7/09/96

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