Do mergers and acquisitions point to the flexible packaging industry’s economic vitality? If so, then 2014 activity says the industry is at a level not seen since the recession bottomed out in 2009. Here are two key indicators that emerge from the FPA’s annual State of the U.S. Flexible Packaging Industry Report 2015.
The number of U.S. mergers and acquisitions in 2104 equaled the number in 2007, the last year before the economic nosedive. However, the value of deals are not as high as 2007 levels.
Global M&A activity increased in the number of deals, but the dollar value moved higher because of a increased value per deal.
FPA’s annual State of the U.S. Flexible Packaging Industry Report 2015, lists 21 U.S. M&A transactions completed in 2014, up from 15 the prior year. Those 2014 deals equaled the number of deals in 2007, the last year before the recession. As the economy bottomed out, the number of actions were just 9 and 7 in 2008 and 2009, respectively. Activity stayed in the mid-teens per year with 16 deals in 2010, 15 in 2011, 18 in 2012, and 15 in 2013.
The 21 M&A actions in 2014 still trails the all-time high of U.S. deals seen in 1999.
The estimated dollar value of flexible packaging companies acquired in 2014 was about $3.7 billion. That was greater than the $2.5 billion recorded in 2013 and the $3.0 billion in 2012. The 2014 dollar value was significantly lower than the approximately $6.5 billion value of M&A activity in 2007, the last year before the recession.
Two of 2014’s purchasers were new to flexible packaging—Bloomer Plastics and TC Transcontinental. Two more transactions involved private investment/equity firms.
From the global perspective, 2014 saw a surge in M&A activity. The year was the most active 12-month period since before the global recession took root in 2008. According to the State of the U.S. Flexible Packaging Industry Report 2015, the activity is not just a temporary burst catching up on lower activity in previous years. The report says that many executives expect the pace of global M&A activity to continue.
Significant in the global data is the rising value of deals. The year started slowly with $1.6 trillion in global deal value through June. However, an increase in value in the last half pushed the global total to $3.71 trillion for the entire year. That was 36 percent higher than the value for all of 2013. Large deals drove the data; there were 95 transactions valued at $5 billion or more. The actual number of transactions grew only 8 percent from 2013 to 2014. Factors such a large cash reserves held by companies, opportunities in emerging markets and rising consumer confidence were among drivers of the upward trend.
The report is available free of charge to members; non-members may buy the report for $3,500. Email email@example.com for information on getting the State of the U.S. Flexible Packaging Industry Report 2015.