Consolidation on the menu for European plastic packaging

Consolidation in the plastic packaging industry is set to accelerate, according to new research.

Richard Sanders main

According to new research by financial advisory firm Catalyst Corporate Finance, the highly fragmented structure of the European plastic packaging industry will create consolidation opportunities.

The report, seen exclusively by Packaging News, is entitled European plastic packaging on the road to consolidation.

The new research suggests that over the past three years almost half of all global merger and acquisition deals in the plastic packaging sector took place in Europe, attracting both trade acquirers and financial investors.

While some segments of the industry, such as flexible food packaging, are dominated by a few large players the European industry as a whole remains highly fragmented, according to the study.

‘Demand from the customers of large players’

“The plastic packaging industry is highly fragmented, which in turn has created consolidation opportunities”, said Richards Sanders, partner at Catalyst.

He added: “European acquirers and financial investors have been at the forefront of this trend accounting for almost half the deals in the sector over the past three years.

“This has been driven by the demand from the customers of large players, for example RPC and Constantia Packaging, which in turn has led to an increase in cross border deals as companies seek to satisfy this demand.”

Plastic packaging giants

European companies have also been the target of trade buyers from outside the continent. The largest deal in the last four years involving a European target was completed by Amcor of Australia in 2012 purchasing Alcan’s flexible packaging business for €1.5 billion.

Amcor has also invested in other smaller European companies, for example, Italian based B-Pack Due for €45 million further strengthening its presence in Europe.

The research suggests that the dominance of Amcor and Alcan in the flexible market will drive consolidation as companies will need to acquire in order to be able to compete.

The report states that private equity firms have been significant investors and account for a fifth of all plastic packaging deals in Europe since 2009.

Eastern Europe

Elsewhere, the report also highlights that there will be a number of acquisitions in Eastern Europe where flexible packaging is experiencing an average sales growth of over 6% per annum.

It also states that the plastic packaging industry in Europe is valued at €38bn annually and that packaging is the largest user of plastics in Europe, representing 39% of the overall 46m tonnes used in plastic conversion.

Catalyst also said that it expects that some of the larger deals in the future will be in the form of the big diversified players divesting either part or all of their plastic packaging operations.