In spite of market challenges in the latter half of the year, 2007 was a record setter for the mergers & acquisition (M&A) in the packaging market. BMO Capital Markets (Chicago), the investment and corporate banking arm of BMO Financial Group, announced that finding and more in its 2007 Mergers & Acquisitions in the Packaging Industry: Annual Deal Review. A strong economy and favorable credit market at the start of 2007, combined with healthy balance sheets, plenty of private equity capital, and a strong rationale for continued consolidation, to drive the record M&A levels, according to Doug Lawson, managing director and head of BMO Capital Markets packaging practice.
The BMO report found that M&A volume increased for the fifth consecutive year, with a total of 386 dealsup 10% from 351 deals in 2006. That total number of deals eclipsed the most recent high of 385 transactions in 2000. For the 137 transactions that reported numbers, the aggregate packaging value reached $32.6 billion , with a median transaction value of $35.3 million. In 2006, the median value was $21 million. Much of the action was among bigger players, with nine of the 10 largest reported deals exceeding $1 billion in enterprise value compared to only two out of the 10 largest reported transactions in 2006.
Strategic investors comprised 66% of deals in 2007, with private equity involved in the remaining 34%. Overall, public companies accounted for the greatest proportion (34%) of packaging acquisitions. BMO also saw geographic interest shift to businesses outside Europe and North America, which accounted for 64% of target companies, down from 74% in 2006.[email protected]