FXI looks to rebuild, merge $1 billion foam empire

FXI - Foamex Innovations, the Media-based company that turns petroleum derivatives into some of the soft things that cushion modern life, is looking for companies to buy as it branches into the gutter-guard, direct-mail bedding, and burn-treatment industries, says Chris Pechock, partner at MatlinPatterson, Media-based FXI's majority owner in New York.

"We are active in the mergers-and-acquisitions arena," in an industry full of smaller firms owned by older people eager to retire, said Pechock, a 1987 Wharton School graduate who still "sneaks over to Abner's" for a cheesesteak when his train stops at Amtrak's 30th Street Station. "We're looking constantly to be opportunistic and make good acquisitions" that will boost profits at FXI, which now employs around 2,100 at plants across North America and outposts in Mexico and Asia.

That's down more than half from the company's mid-2000s peak, following two bankruptcies, a wave of plant shutdowns and sales, and the collapse of auto and home sales using Foamex products. The closures included the company's former 150-worker, 30-acre Delaware River complex in Eddystone, which Camden Iron & Metal bought for $13 million as the next home for its car-smashing recycler on its state-assisted move from its current site on the road from Philadelphia International Airport to the Eagles stadium.

FXI's first acquisition since its latest reorganization is Monzi Inc., a North Jersey firm that markets gutter guards. FXI chief executive Jack Johnson says Monzi "doubled sales" of FXI's Rain Filter-brand gutter guards (designed to drain water, but leave debris on top) through deals with Costco and other chains. "We're also talking to Lowe's," Johnson told me.

Pechock has its eye on bigger buys. "For a specialty company like a medical-mattress maker, we could spend $80 million," he said. "For a competitor with half a billion dolars in revenue, we could spend maybe $200 million."

The most important facility FXI saved was its research lab, now located in Eddystone, chief executive Johnson told me. "They do good stuff," said Dr. Michel Hermanns, a burn specialist and retired medical director for Bristol Meyers Squibb who heads a scientific advisory board for FXI. He said the company is unusual among foam-makers, for example, for its ability to develop and clinically test compression of mattress materials, whose varying thickness helps burn victims avoid "pressure point ulcers," what we used to call bedsores.

FXI has also started marketing mattresses direct to consumers, through QVC, the West Chester-based home-shopping channel.

Johnson is on his second tour as boss of what's now FXI. The former Arco Chemical executive and Safety-Kleen boss left Foamex during an earlier stint in the late 1990s, when he clashed with then-Foamex owner, Marshall Cogan, who had pioneered debt-heavy buyouts and mass layoffs in the 1960s as an investment-banking partner of future Citigroup founder Sandy Weill and Securities and Exchange Commission boss Arthur Levitt. "They made a lot of wreckage," Johnson said of those serial borrowers. "They didn't care about the debt load. It was a careless way to go...

"We've really worked hard to change the culture of the company," Johnson told me. "We've brought people in from Campbell's and other great companies" around Philadelphia. "We're optimistic we can get back to making this a billion-dollar company."