Mobil Corp., seeking to expand its Hefty division from plastic bags to wastebaskets, laundry baskets and kitchen accessories, said yesterday it had agreed to acquire Tucker Housewares, the second-largest maker of such products in the United States.
Fairfax-based Mobil said it would pay $185 million for Tucker, which it is acquiring from HM Holdings Inc., a subsidiary of London-based conglomerate Hanson PLC.
Tucker joins Hefty as part of fast-growing Mobil Chemical, which accounted for $4.2 billion of Mobil's $56 billion in revenue last year but supplied nearly one-third of the parent company's $1.8 billion profit.
The acquisition comes at a time when Mobil, like other oil companies, is enjoying a large increase in profitability as a result of skyrocketing oil prices.
During the oil crises of 1973 and 1979, major oil companies came under a great deal of political pressure and criticism for making acquisitions in other fields in an effort to dissipate their profits -- including Mobil's acquisition of the Montgomery Ward department store chain and Exxon Corp.'s acquisition of Reliance Electric Co., a maker of electric motors.
But Mobil officials said yesterday the acquisition of the plastic housewares company had been under negotiation for weeks before Iraq invaded Kuwait Aug. 2, setting off the oil price spiral, and said the acquisition fit a previously announced strategy of expanding the Hefty name into plastic products for home and business.
"This is just a straightforward grow-the-business deal," a Mobil spokesman said. "This deal has been in the works for many months."
Last year, Hefty diversified out of its core business of making plastic bags, film and food-packaging products by introducing a line of plastic waste baskets. Other, similar products have followed, but Bonita Austin, an analyst at Wertheim Schroder & Co. in New York, said the company had had difficulty making the new products a success against industry leader Rubbermaid Inc.
"They've tried to get into some of these markets with the Hefty brand name with very little success. It's hard to get shelf space in this category," she said.
Although petroleum is the main ingredient in plastics, Austin said she doubted Mobil would gain an advantage by being able to supply its own raw materials, since plastics prices have been slumping even with the rise in oil prices and Rubbermaid, as one of the nation's largest buyer of plastics, already gets good materials prices.
"Marketing, in my opinion, is more important than manufacturing in this industry," she said. "Mobil is not a marketing company."
However, Austin said, Mobil may be able to improve Tucker's competitiveness against Rubbermaid by holding down prices to gain market share. "Mobil has deep pockets, and it shows that Mobil wants to get into the consumer business," she said.