The packaging merger and acquisition (M&A) marketplace in 2013 has seen several significant trends that will continue to influence activity throughout the rest of the year.
There has been an acceleration of international M&A activity, largely by strategic acquirers. Consumer packaged goods companies are rapidly expanding their global operations. As a result, packaging companies are following suit in order to better serve their customers. Chart 1 details several significant global M&A transactions that have recently been announced. The flexible packaging industry in particular has seen heightened levels of activity.
At Mesirow Financial, we are also seeing strategic acquirers make use of M&A to meet tactical corporate objectives. Companies are simply finding it easier to achieve growth objectives through acquisition rather than organic growth.
Common corporate objectives addressed by M&A include: product line extensions, market share expansion and cost structure improvement, as seen in Chart 2. Flexible packaging is well-represented within this trend.
Private equity is also a significant driver of M&A activity. The asset class continues to attract institutional investment dollars. In turn, private equity sponsors find the packaging industry an attractive target for capital deployment.
The flexible packaging industry in particular is appealing to private equity. The industry is growing, fragmented, characterized by exciting product development and there are numerous well-managed companies operating within it. Chart 3 demonstrates a few recent private equity investments in the packaging industry, including flexible packaging.
We expect these trends to continue throughout the rest of 2013. Public companies that effectively utilize M&A have seen their stock prices increase, and private equity groups that do the same have seen their portfolio values grow. This is a healthy backdrop for continued M&A activity in packaging.