„Welcome to our new Packaging Industry Insight, giving you a birds-eye market view especially from an M&A perspective. Very high fragmentation is one of the key drivers for M&A activities. Both strategic and private equity investors are surging for consolidation or add-on acquisitions in order to gain customers and innovation knowledge.“
Global Industry Split 2018
Market share by segment (%)
HY1 M&A Deals Split 2018 vs 2019
by segment (%)
- The overall packaging market is expected to grow by 3.1% CAGR until 2022. The strongest segment is expected to be Flexible Packaging with 3.4% p.a., as increasing market demand for consumer-friendly packages and enhanced product protection have propelled a viable and cost-effective alternative to rigid plastics.
- Market fragmentation is very high with many privately-owned mid-cap companies having the majority of market share. Again, particularly intense is the fragmentation within flexibles and rigid plastics, in which the top three players have a collective 5 to 7% market share. Within board, the top three have a 15% share.
- M&A activity has been flourishing during recent years. In addition to experiencing moderate organic growth, companies have tried to gain market share through acquisitions. Board Packaging recorded the most deals closed in the first HY 2019 and could strengthen its position as the leading M&A activity segment within packaging.
Major Trends and their Impacts
- These five trends are seen as particularly important within the packaging industry. High awareness and agility are needed to stay in-line with the general development.
- E-Commerce is going to play the most important role, as more and more products are sold online and rising requirements, such as last-mile delivery drive innovation.
- Personalization, convenience, health, and affordability are only few changing consumer preferences which converters are facing. Additionally, compressed margins put back by FMCG and retail companies are putting converters under pressure to produce more cost effectively.
- Demand for recyclable packaging has increased significantly, owing to increased awareness and concern about the environment.
Sources: Smithers Pira (2019), Technavio (2019); McKinsey (2019); PMFC, Sazun Research
Trading Multiple Comparables
- The Peer Group contains internationally-listed companies throughout all packaging sub-segments which differentiate in product portfolio, size and relative competitive advantage.
- With just minor fluctuations in expected multiples, market valuations prove to be stable.
- Although growth expectations are moderate, companies are highly valued for their profitability and low risk. Peer group EV/EBITDA (NTM) multiples stay within a solid range of 8 to 9x EBITDA.
Note: The peer group is formed out of international stock-listed companies. For calculation purposes, two-year averages of consensus estimates on a next 12 months (NTM) basis were used
Key Performance Indicators
Selected Latest Deals
Want to know more?
If you would like to learn more about the valuations and deals of your industry, the transaction mentioned above or generally our way of working, we would certainly be happy to demonstrate our m&a PLUS® principle in a confidential meeting.
Just get in touch and we will share our experience on how to grow businesses with long-lasting partnerships.
With passion for M&A,
Your SAZUN Team