2009 was a business year many of us would like to forget. But fortunately, 2010 was a year of rebounds, especially for mergers & acquisitions in the packaging and converting industries. Here’s a quick summary from BMO Capital Markets’ just-released report, “Mergers and Acquisitions in the Packaging Industry: 2010 Annual Deal Review.”
Global Deal Volume: After declining about 50 percent from 2007 levels during The Great Recession, there were 226 transactions globally in 2010. This represents a 35 percent increase over the 168 transactions announced in 2009. Aggregate value for the 69 deals with reported data last year was $17.7 billion, an increase from $10.6 billion in 2009.
North American Deal Volume: There were 79 US & Canadian transactions last year, an 18 percent increase over the 67 deals announced in 2009. North America made up 35 percent of 2010 global volume compared with 40 percent in 2009. Aggregate reported deal value was $9.3 billion last year, a 42 percent rise over the $6.0 billion in 2009.
Deal Volume by Sector: North American deals were relatively similar to the global market overall. Flexible packaging made up the second-largest proportion of deals with 22 percent of global and 20 percent of North American volume. Paperboard was third-largest globally with 18 percent of volume, and “Other” packaging was third-largest in North America with 14 percent of total volume. The number of transactions increased from 2009 to 2010 across all sectors except labels, in which total deals remained flat.
My Thoughts: Packaging M&As fell in 2009 to their lowest level in more than a decade. We all know the reasons: The bottom dropped out in late 2008, no one could borrow money, sales fell, unemployment rose, and an overall conservative mindset set in. But, it’s called an Economic Cycle for a reason. It’s cyclical. And while 2008-09 will likely go down as the worst decline since The Depression, many signs are once again pointing up.