Plastics and packaging M&A on the rise in 2011Plastics and packaging M&A on the rise in 2011

Packaging M&A deals totaled 200 in the first half of 2011, up slightly from the 193 of a year ago, and on pace to eclipse 400 and make 2011 the highest year for total deal volume in plastics and packaging M&A. Investing banking firm, P&M Corporate Finance LLC, had those finding and more in its quarter plastics and pakcaing M&A report.

Finacial buyers led the way in the first half of the year, accounting for 82 deals, which is up 32% from a year ago, with P&M noting that these investors "aggressively pursued opportunities to invest record levels of undeployed capital." Financial buyers increased the number of new platform investments by 14% over the same time period in 2010, and addon acquisitions to existing financial investor platforms were up significantly, jumping by 58% (15 deals).

Plastics and Packaging M&A 1H 2011

Injection molding, film, and specialty deals were the most prevalent, with all but two sectors of plastic processing showing heightened levels of M&A activity. Packaging deals remained an area of high focus for buyers, with deal levels keeping pace in the first half of 2011 with the record volume seen over the first six months of 2010.

Flexible packaging transactions increased to a larger percentage of packaging transactions, rising by six deals year over year, while rigid packaging deals did not increase but remained at elevated levels.

Looking forward, P&M speculated that the remainder of 2011 "holds positive signs that activity will continue to occur at highly active levels." It did offer several caveats, notably:

Global deals on the rise, China goes shopping

Global industrial manufacturing M&A in the first quarter of 2011 showed substantial increases in deal volume and value over the year-ago quarter but was actually down from the fourth quarter of 2010, according to accounting firm, Pricewaterhousecoopers. Its report found that the number of deals in the first quarter was on track to meet or exceed the level of activity in 2010, noting an optimistic tone that might sound different today given the global market tumult. "Greater confidence in the continuing global economic recovery combined with stronger balance sheets, improved financial markets, and greater credit availability should create favorable conditions for successful deals throughout 2011."

Investment into Europe by Chinese manufacturing companies was forecast to reach record levels in the second half of 2011, according to an analysis by Deloitte. The total value of the five transactions announced in the first six months of the year was north of $1 billion, with that figure expected to increase by the end of the year, creating the potential for the largest volume of deals announced in a decade. It would also surpass the record of eight deals into Europe that were completed in 2010.

A survey of more than 1000 Chinese businesses revealed that manufacturing is the most common Chinese sector to make overseas investment (33%), followed by wholesale and retail (17%), agriculture, forestry and fishery (17%), and mining (13%).