Record M&A activity for packaging in 2007

BMO Capital Markets, the investment and corporate banking arm or BMO Financial Group, released its latest report titled Mergers & Acquisitions in the Packaging Industry: Annual Deal Review, finding that M&A activity in the packaging sector hit record levels in 2007 despite the challenging credit environment in the latter part of the year. The report examines M&A activity by packaging sector, geography, and transaction valuations, as well as whether the acquirers were strategic or financial. Doug Lawson, managing director and head of BMO Capital Markets’ packaging practice, reported that the number of transactions in the packaging industry reached 386, representing a 10% increase year-over-year from 351 deals in 2006. The number of deals had not been that high since 2000, when there were 385 transactions.

Aggregate packaging value reached $32.6 billion for the 137 transactions with reported values. The median reported packaging transaction value was $35.3 million in 2007, representing a significant increase over the median value in 2006 of $21 million. Overall, public companies accounted for the greatest proportion (34%) of packaging acquisitions.

M&A activity was strong across all regions of the world, with strategic acquirers increasingly looking outside of the U.S. and Europe for acquisitions in 2007. Only 64% of target companies were located in North America or Europe in 2007 compared to 74% in 2006.

Transaction volume was strong across rigid, flexible, and paperboard sectors, with the number of deals being relatively evenly dispersed between the rigid packaging sector (27%), flexible packaging (26%), and paperboard packaging (22%). The remainder of activity was split between the label, machinery, and other packaging sectors.—[email protected]