In terms of both number of transactions and value, merger and acquisition activity in the flexible packaging industry stayed strong in 2015. And, global M&A activity — across all industries — also showed strength with an uptick in transaction value. That overview comes from FPA’s 2016 State of the U.S. Flexible Packaging Industry Report.
In 2015, the U.S. flexible packaging industry saw 18 transactions compared to 21 the prior year. That remains strong, compared to the minimal activity levels seen during the recession of 2008-2009. From a dollar value perspective, 2015 M&As were just under $3 billion. The year-earlier figure was $3.7 billion. Both levels are consistent with the value range reported since 2011 and the overall recovery from the recession.
New entrants to the industry accounted for 17% of M&A activity. The new entrants included one company already in the packaging business; they also included two private investment/private equity firms that entered the flexible packaging industry.
One question in the State of the U.S. Flexible Packaging Industry Survey asked about future M&A plans. Of the respondents, 31% said they were planning to make an acquisition in 2016. Half said they would pursue an acquisition in the next three to five years.
Global M&A Trends
To put flexible packaging activity in perspective, FPA’s report also analyzes global activity of the 12 months of 2015.
Worldwide, the pace of M&A activity continues to be robust and appears to be a solid trend rather than a temporary rebound after the global economic crisis of 2008. The number of deals rose modestly at 2.7% above year-earlier totals. However, the value of transactions continued to climb with the 2015 number up 16.4% over the 2014 figure. For 2015, the total value was $4.57 trillion. Value of transactions was more than twice as high as a decade earlier.
In North America, the value of 2015 deals hit a record high of $2.92 trillion, for all industries. This was a 9% increase from 2014 levels. The move toward higher-value deals was reflected in the fact that the actual number of deals fell by nearly 6%.
Look to the Future
According to FPA’s report, those with experience in the M&A field expect solid performance in 2016. Large cash reserves held by companies, along with opportunities and emerging consumer confidence, should contribute to future actions.
FPA’s Fall Executive Conference will deliver more information on M&A activities. Richard Weil, Managing Director, Investment Banking, Mesirow Financial Holdings, Inc., will provide a presentation titled, “Packaging Industry: M&A Perspectives.”
For More Info
The FPA 2016 State of the U.S. Flexible Packaging Industry Report is a benefit for FPA members who can download it at www.flexpack.org. Non-members can buy the report for $3,500; go to www.flexpack.org to complete the purchase.