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Packaging M&A deals tumble 35% in 2008Josh Brooks, 7 January 2009Be the first to comment on this article Global packaging M&A activity slumped to its lowest level in a decade in 2008 as the effects of the credit crunch kicked in, and the outlook for 2009 is just as tough, according to a report published yesterday. US-based BMO Capital Markets claimed that some 252 transactions had been announced during 2008, down 35% on the 2007 figure of 386. Private investors also took the lead on public companies as the key deal-makers in the industry. The drop-off in deals was led by north America, where the credit crisis has been hardest felt, with a drop from 142 transactions in 2007 to just 86 in 2008. In terms of market sectors, flexible packaging had the biggest slowdown in M&A activity. However, deal volumes were evenly spread across the industry, with rigid packaging accounting for 29% of deals, paperboard 24% and flexible 23%. The balance of buyers also shifted away from public companies towards private buyers, who accounted for two-thirds of all deals. Of these, private equity firms were the buyer in 34% of all deals. Doug Lawson, managing director of BMO Capital Markets packaging practice, said that the figures reflected the tough economic conditions. “The credit crisis and a difficult economic environment combined with unprecedented spikes in resin, oil and paperboard prices resulted in a significant slowdown in packaging M&A activity. “While we expect the challenging conditions to persist in 2009, we believe that packaging industry fundamentals remain attractive over the medium-to-long term and the strong rationale for consolidation in the packaging sector continues to exist.” Speak Your Mind |
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