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Packaging M&A slows from record 2010 pace

Down slightly from a record 2010, plastics and packaging M&A is experiencing another "solid year" in spite of total deal activity slipping anywhere from 5% to 10%. The 74 deals finalized in the third quarter were down 20 transactions from Q3 2010 but still reflected strong buying and selling activity albeit at a more normalized level versus the pace set in 2010, according to the report's author, P&M Corporate Finance LLC.

P&M says 2010's record levels of plastics M&A were partly fueled by large cash savings among strategic buyers and pent up demand across financial investors. Thus far in 2011, financial buyers, are completing 39% of transactions versus 35% through the first three quarters of 2010.

The smallest percentage of financial buyers, 35%, was seen in the third quarter, despite those entities completing a significant number of platform (17) and add-on transactions (9).

Blowmolding deal activity down

Injection molding, thermoforming, and the film and sheet sectors all showed higher deal volume as consolidation continued unabated. Blowmolding, however, which is already a more consolidated sector, was down by the highest percentage year over year due to a lack of quality acquisition opportunities.

Packaging deals through the first three quarters of 2010 totaled 103, versus 88 through the first three quarters of 2011. The difference of 15 deals is nearly half comprised of a decline in bottling packaging activity. By comparison, rigid and flexible packaging activity remained robust, with a healthy level of quality acquisition targets and a multitude of interested financial and strategic buyers.

Global blowmolding deal volume declined nearly 41% through the first nine months of 2011 versus 2010, with sector M&A activity on pace to reach levels similar to those experienced in 2008. Transaction activity among financial buyers accounted for approximately 54% of total YTD 2011 deal volume, rising from 36% in 2010.

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