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Packaging M&A Update: Q1 2016

Strategic consolidation and sustained low resin prices are driving a number of transactions in the packaging industry. Packaging M&A update provides Deloitte Corporate Finance LLC insights and market data analysis that shed light on M&A trends in the packaging industry.

M&A activity in Q1 2016 was primarily driven by strategic consolidation

Packaging M&A activity in Q1 2016 was dominated by strategic buyers looking to increase capacity, expand into adjacent markets, and diversify product offerings.

  • Transilwrap (Jordan Co.) agreed to acquire the specialty films business of Dow Chemical Co. in order to strengthen its global footprint and expand into the health care market. Since its acquisition by Jordan Co. in 2013, Transilwrap has successfully executed multiple acquisitions to broaden its offerings and capabilities and expand market coverage.
  • Bunzl plc acquired Earthwise Bag Company, a provider of reusable bags in an effort to add environmentally friendly products to its current product offerings for the grocery and retail sectors.
  • Graphic Packaging is expanding its folding carton converting business through the acquisitions of Walter G. Anderson, Inc. and the converting assets of Metro Packaging & Imaging, Inc.

Sustained low resin prices continue to favorably impact the packaging industry

Low resin prices have driven down the costs of production for packaging processors and reduced prices for customers. The favorable economic environment has also led to some packaging processors expanding capacity for existing and new product lines, both organically as well as through acquisitions.

In addition to lower raw material costs, the following trends have significantly impacted the packaging industry in 2015-2016:

  • Significant growth in sustainable packaging as consumer preferences shift towards environmentally friendly products.
  • Higher disposable income has resulted in a spike in demand for consumer packaged products.
  • The flexible packaging segment continues to outpace the paper and foil segments due to performance benefits such as barrier protection, increased shelf-life, light weight, easy-open features, high impact display, and convenient storage.

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Sources: Capital IQ, RISI, Freedonia, Inc., Euromonitor, Packaging Digest, and Analyst Reports

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