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After a slow start to 2013, plastic packaging M&A reported increasing volumes during Q3 2013, according to a report from PMCF, a middle market investment bank. Through Q3 2013, the total year to date activity is 236 transactions.Still, Q3 YTD is down year over year, which PMCF said is primarily due to an "abnormally low Q1 volume."

PlasticsToday Staff

November 22, 2013

1 Min Read
Plastic packaging experience increasing M&A volumes

"However, current trends of increasing deal activity among plastic packaging processors reflect a healthy M&A environment and are likely to continue if general economic conditions remain steady and support attractive valuations for sellers," PMCF stated.

Driving valuations are active strategic buyers, domestic and international, increasingly focused on M&A execution to grow and deploy cash reserves. Further, PMCF reports that  \private equity buyers are seeking to take advantage of low interest rates and deploy funds which continue to exceed the available targets.

Some of the Q3 2013 plastic packaging M&A trends include:

  • Transactions involving thermoformers and resin suppliers each increased versus Q3 YTD 2012, while film and specialty processor deals experienced the largest year over year declines.

  • Industry transactions including flexible packaging, rigid packaging, and bottles, combined for approximately 34% of plastics and packaging deal volume through Q3 2013.

  • Industrial end markets continued to drive the highest share of M&A activity while transportation and electronics transactions posted the strongest growth versus Q3 YTD 2012..

  • Publicly traded plastic and packaging companies outperformed the S&P 500 during Q3 2013 as average EV/EBITDA trading multiples exceeded 8.0x for the third straight quarter.

Some of the marquee transactions included Silgan Holding, Inc.'s acquisition of closures manufacturer Portola Packaging, Inc. for $266 million and the Carlyle Group's acquisition of blow molder and packaging group Chesapeake Ltd. from Irving Place Capital for an undisclosed amount in July 2013.

"Going forward, consolidation remains a key driver in strategic buyer rationale and aggressive private equity buyers continue to be very active in the industry.," PMCF stated. "Given numerous buyers with high levels of interest, and a limited number of interested sellers, it appears that seller's market conditions are likely."

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