In a year that featured the U.S. presidential election and strong interest in private equity, global plastic packaging M&A registered healthy levels of activity, according to P&M Corporate Finance (PMCF), a middle market investment bank that provides merger and acquisition advisory services.
According to PMCF's Q3 2012 report, plastic packaging actually recorded a small year-over-year increase versus 2011.
John Hart, director of PMCF, co-leads the plastics and packaging group, told PlasticsToday there are a number of factors at play for this increase in activity.
"I think in general the space is viewed as strong and recession resistant; there are strong margins and opportunity to get a return on investment," he said. "There are a number of strategic buyers that are focused on growing though acquisitions."
Plastic packaging M&A totaled 280 deals through the Q3 of 2012, versus 275 in the same period in 2011. Deal flow by quarter in 2012 has been fairly stable, with Q1 at a high of 96 transactions, Q2 at 94 transactions and Q3 at 90 transactions. With Q3 2012 significantly above Q3 2011, 2012's run rate reflects a pickup in activity from the first two quarters of this year, when volume slightly lagged 2011.
M&A activity for custom molding, consumer products and building products all experienced year-over-year increases with custom molding increasing by 9% and building products by 4%. Plastic packaging segments, including rigid, flexible and bottling converters, accounted for one-third of all transactions.
Some of the large international transactions in the space included:
- Nordson Corp. acquiring Xaloy Superior Holdings Inc. for $200 million in a move that will expand its offering to global flexible packaging and plastic processing markets in June 2012. That acquisition news followed Nordson announcement it has acquired extrusion-dies producer EDI Holdings Inc. for $200 million.
- Sun Capital Partners' acquisition of Rexam's personal care division for $459 million in July 2012.
- Mondi Group's acquisition of Nordenia International AG for $706 million in July 2012.
- The Carlyle Group's acquisition of DuPont Performance Coatings, Inc. from E.I. du Pont de Nemours Co. for $5.2 billion in August 2012.
- Australia-based Pact Group Pty acquired Viscount Plastics Pty Ltd. from the Linpac Group for $145 million in August 2012.
- Another Linpac deal: The company entered a definite agreement to sell its subsidiary Ropak Packaging, a rigid plastic shipping container producer, to rigid container manufacturer Bway Corp. for $265 million in December 2012.
PMCF said deals involving injection molders declined by seven deals through Q3 2012 compared with the same period a year earlier, despite significant increases in activity within industrial, medical, and food and beverage end markets.
Transaction mix among financial and strategic buyers shifted slightly as acquisitions by private equity groups declined by only a single deal to account for nearly 41% of injection molding deals versus approximately 39% through Q3 2011, PMCF stated.
Still, cross-border M&A declined by just one deal compared with 2011 while acquisitions shifted to an even split between U.S. and foreign investors. Distressed deal volume among injection molders was also down two deals versus the comparison period.