Q3’16WWW.PMCF.COM
INSIDE THIS ISSUE
Packaging Market M&A Overview & Analysis PAGE 3
M&A Activity in Rigid & Flexible Plastic, Paper, and Other Packaging Types PAGES 4–7
Current Public Packaging Valuation Trends PAGE 8
Private Equity M&A Activity and Debt Utilization PAGE 9
PACKAGING M&A PULSE T H I R D Q UA R T E R 2 01 6
2 | PAC K AG I N G M & A P U L S E | F I R ST H A L F 2 016
PMCF Packaging Transaction Announcements
INVESTMENT BANKING SERVICES:• Mergers & Acquisitions• Sales & Divestitures• Strategic Assessments• Sale Planning• Capital Raising
JOHN HARTManaging DirectorPlastics & Packaging [email protected]
ABOUT PMCFP&M Corporate Finance (“PMCF”) is an investment banking firm, focused exclusively on middle market transactions, with professionals in Chicago, Detroit, and across the globe through Corporate Finance International associates in 27 countries. The firm was founded in 1995 and has successfully closed over 250 transactions.
Our dedicated Plastics & Packaging Team has extensive industry knowledge and covers a wide range of packaging manufacturers including plastic, corrugated, paper, metal, glass, and other types of packaging. Offering a depth of advisory services, the Plastics and Packaging Team has helped clients worldwide meet their sale, acquisition, financing, and strategic growth objectives.
PMCF is an affiliate of Plante Moran one of the nation’s largest professional services firms.
PACKAGING: INDUSTRIALRigid PlasticCompany Sale to Strategic Buyer
PACKAGING: CORRUGATEDPaperCompany Sale to Strategic Buyer
PACKAGING: BEVERAGERigid PlasticStrategic Acquisition
Undisclosed 2016 Transaction:
Blow Molded Rigid Plastic Packaging
has been acquired by
has acquired
PHIL GILBERTManaging [email protected]
MATT JAMISONManaging [email protected]
RYAN SHUCHMANVice PresidentPlastics & [email protected]
PMCF Senior Team Members
W W W. P M C F. C O M | 3
0
2
4
6
8
10
6.5x 6.8x
7.9x
6.7x
8.0x 8.2x
2010 2011 2012 2013 2014 2015
8.1x
Q3 YTD ‘16
0
50
100
150
200
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300
151 160137
188153
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230 234 234
269
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2012 2013 2014 2015 Q3 YTD ‘15
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P R I VAT E E Q U I T Y P L AT F O R MS T R AT E G I C P R I VAT E E Q U I T Y A D D - O N
150
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39
229
Q3 YTD ‘16
PACKAGING TRANSACTIONS: AVERAGE EV / EBITDA MULTIPLE
PACKAGING M&A DEALS BY BUYER TYPE
Market Summary & Outlook - Q3 2016
2012
Q3 YTD ‘15 Q3 YTD ‘16 ‘15–’16 Change
# % # % # %
Rigid Plastic 63 29% 53 23% -10 -16%
Flexible Plastic 43 19% 43 19% 0 0%
Paper 82 37% 91 40% 9 11%
Other 33 15% 42 18% 9 27%
TOTAL 221 100% 229 100% 8 4%
PACKAGING M&A DEALS BY TYPE
Sources: Capital IQ, Thomson Reuters, Company Reports, PMCF
Note: Other packaging includes glass and metal packaging, packaging machinery/equipment, and packaging distributors
TOTAL PACKAGING M&A BY QUARTER
Q1 ‘16 Q2 ‘16 Q3 ‘16
73 73 83
2016 extended a robust environment for packaging M&A activity record-ing 229 deals through the third quarter of the year. While activity was stable at 73 transactions in each of the first two quarters in 2016, Q3 increased to 83 deals, or a 14% increase, from Q1 and Q2 of the year. This M&A volume growth puts year to date activity for 2016 slightly above the comparable period in 2015. For perspective, total 2015 packaging M&A activity reflected a multi-year high point.
Through the first three quarters of 2016 volume growth has been driven by private equity add-on acquisitions which grew by 40% compared to the same period in 2015. New private equity platforms averaged 41 per year between 2012 and 2013, but this average increased to 56 in 2014 and 2015 (a 27% increase). These new platforms can be very aggressive in seeking and completing add-on acquisitions in the first several years of the investor’s holding period, which may explain in part the increase in industry add-on transactions. For private equity overall, their focus on in-dustry consolidation and platform building has been directly supported by the continued availability of ample low cost financing.
In reviewing activity by sector for 2016, flexible plastic packaging activity was flat while rigid plastic packaging has decreased by 10 deals vs Q3 YTD 2015. Rigid plastic packaging remains a highly sought after segment for M&A, but has limited targets given the active historical consolidation. More fragmented sectors, including paper packaging, drove the increase in M&A activity as strategic buyers were very active in consolidating these packaging suppliers. Outside of paper and plastic, buyers focused on packaging machinery & equipment and metal packaging manufacturers which contributed to increased volume in this segment as well.
The quarter was characterized by some marquee transactions as strate-gic and private equity buyers executed their M&A strategies. Rigid plastic packaging experienced multiple $250M+ deals with Amcor’s (ASX:AMC) acquisition of Sonoco’s Blow Molding operations and Sulzer’s (SWX:SUN) acquisition of GEKA GmbH. Both strategic led transactions were at 8.0x+ valuations before accounting for post-transaction synergies. Within the flexible packaging segment, Berry Plastic’s (NYSE:BERY) $765M acquisi-tion of AEP Industries (NasdaqGS:AEPI) reflected Berry’s continued focus on landscape changing, large transactions. For private equity, key deals included Madison Dearborn’s acquisition of Powerflute Oyj (AIM:POWR) for $361M, BWAY’s (Stone Canyon) acquisition of KLW Plastics, and Plati-num Equity’s acquisition of the Foam Plastic Solutions industrial packag-ing business of Broadway Industrial Group.
Driving in part M&A volumes are elevated valuations which have contin-ued to remain at an average EV/EBITDA of more than 8.0x for 2016. Cur-rently sellers are enjoying very strong interest in packaging companies driven via buyers’ desire to create inorganic growth, capture synergies, and put idle capital to work. Current economic conditions appear to be robust, but we remain somewhat cautious primarily due to the extended length of the current, robust cycle as we look forward regarding M&A ac-tivity. However, given current market conditions, PMCF expects elevated valuation levels to continue for the majority of 2017 for quality packaging businesses.
4 | PAC K AG I N G M & A P U L S E | F I R ST H A L F 2 016
FEATURED SEGMENT TRANSACTIONSSeptember 2016 - Amcor Rigid Plastics, a subsidiary of Amcor Limited (ASX:AMC), agreed to acquire the North American rigid plastics blow mold-ing operation of Sonoco Products Company (NYSE:SON) for $280 million, representing an EV/EBITDA multiple of 8.0x LTM EBITDA. Sonoco’s blow molding has strong customer relationships in markets including personal care and specialty food. This acquisition will enhance Amcor’s product offering by adding complementary capabilities and technologies, including more extensive extrusion blow molding and injection technologies, ex-pertise in producing polyethylene, polypropylene and multi-layer containers, as well as additional decorating capabilities. The Sonoco blow mold-ing business has six production sites in the United States and one in Canada. The business generated annual sales of approximately $210 million.July 2016 - Sabert Corporation, a leading privately-held manufacturer of thermoformed plastic food packaging, has acquired Mullinix Packages from investment firm Mason Wells. Mullinix, an integrated thermoformed plastic packaging business, produces a variety of custom and stock packaging products for the food service and food processor markets. The Mullinix transaction follows Sabert’s acquisition of Kalman Packaging in the first quarter of 2016, a manufacturer of hinged plastic food containers for bakeries and supermarkets. Mason Wells first acquired Mullinix in 2011. Relevant Mason Wells’ packaging holdings include AWT Labels and Packaging and thermoformed healthcare packaging manufacturer Nelipak Corporation.
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34 36 3651
40
11
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33 15
14
17
21
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18
72 69
55
80
63
2012 2013 2014 2015 Q3 YTD ‘15
28
12
13
53
Q3 YTD ‘16
7
Q 3 Y T D ‘ 1 5 Q 3 Y T D ‘ 1 6
6 3 D E A L S 5 3 D E A L S
16%
68%16%
B O T T L E S
C L O S U R E SO T H E R R I G I DPA C K A G I N G
17%
72%
11%
B O T T L E S
C L O S U R E SO T H E R R I G I DPA C K A G I N G
Rigid Plastic Packaging Transaction Activity
Date Buyer Target Industry / ApplicationEnterprise Value ($mm)
EV / EBITDA
12-Sep-16 BWAY Corporation KLW Plastics, Inc. Industrial - -
1-Sep-16 Amcor Ltd. (ASX:AMC) Sonoco Blow Molding Consumer 280.0 8.0x
15-Aug-16 Consolidated Container Company Semopac Canada Inc. Food & Beverage - -
2-Aug-16 Groupe Axium KKT Kaller Kunststofftechnik GmbH Food & Beverage - -
22-Jul-16 Pretium Packaging Custom Blow Molding Food & Beverage - -
20-Jul-16 Placon Corporation Inc. Brookdale Plastics, Inc. Medical - -
18-Jul-16 Sabert Corporation Mullinix Packages, Inc. Food & Beverage - -
18-Jul-16 Rohrer Corporation CardPak, Inc. Consumer - -
1-Jul-16 Sulzer, Ltd. (SWX:SUN) GEKA GmbH Consumer 290.0 9.6x
TRENDS IN M&A:
• Rigid plastic packaging M&A in the third quarter of 2016 totaled 26 transactions, the same number of deals as Q3 2015, while year to date volume remains down
by 10 deals, or 16%, in Q3 YTD 2016 versus Q3 YTD 2015
• Transactions involving bottles and other rigid packaging manufacturers represented a greater share of total deal volume in Q3 YTD 2016, versus Q3 YTD 2015, as
the proportion of deals involving closure manufacturers decreased by 5% year over year reflecting the limited supply of these targets
• Private equity was increasingly active in rigid plastic packaging through Q3 YTD 2016, up 2 deals, or 9%, compared to Q3 YTD 2015. Rigid plastic packaging
continues to be very aggressively targeted by these investors
TRANSACTIONS BY BUYER TYPE RIGID PLASTIC PACKAGING M&A BY PACKAGE TYPE
Sources: Capital IQ, Thomson Reuters, Company Reports, PMCF
Note: Other Rigid Packaging Includes Primarily Thermoforming and Injection Molding
SELECT TRANSACTIONS IN RIGID PLASTIC PACKAGING
1Carlyle Group’s offer valued the entire company at $727 million (Reuters)
W W W. P M C F. C O M | 5
Flexible Plastic (Film) Packaging Transaction Activity
Sources: Capital IQ, Thomson Reuters, Company Reports, PMCF
FEATURED SEGMENT TRANSACTIONSAugust 2016 - Berry Plastics Group (NYSE:BERY) has acquired flexible packaging film manufacturer AEP Industries for $765 million, or an EV/EBITDA multiple of 7.4x. AEP manufactures a variety of products including custom films, stretch wrap, food contact film, can liners, and printed and converted film for food and beverage packaging. The acquisition of AEP will complement Berry’s Engineered Materials division and bolster manufacturing capacity with 14 new manufacturing facilities located across the United States and Canada. Berry expects operational synergies from the transaction to result in a minimum annual savings of $50 million per year, which over time will help achieve Berry’s longer term goal of accelerating debt repayments. AEP had sales of $1.1 billion and EBITDA of $103 million for the year ending April 2016.July 2016 – Investment firm Lindsay Goldberg has acquired flexible packaging manufacturer Schur Flexibles Group. Austria-based Schur primar-ily manufactures flexible packaging products for the food industry. Schur Flexibles was formed in 2012 by German investment firm Capiton and industry expert Jakob A. Mosser. Schur had sales of approximately $407 million in 2015 and operates 11 manufacturing facilities across Germa-ny, Denmark, the Netherlands, Poland, Finland, Greece and Slovakia. The acquisition of Schur represents Lindsay Goldberg’s second European plastic packaging investment in the past 5 years. Lindsay Goldberg sold Netherlands-based closure and container manufacturer Weener Plastik GmbH to 3i Group in 2015.
TRENDS IN M&A:
• Flexible plastic (film) packaging deal volume totaled 43 transactions through Q3 YTD 2016, as the sectors deal levels remained flat compared to Q3 YTD
2015
• The proportion of total segment deal volume involving converters of flexible plastic packaging for industrial applications increased by 10% in Q3 YTD
2016, compared to Q3 YTD 2015, driven by increased buyer focus on flexible packaging suppliers in industrial and medical segments
• Strategic M&A activity through Q3 YTD 2016 was up 15%, or 4 deals, compared to Q3 YTD 2015, accounting for 72% of segment deal volume
TRANSACTIONS BY BUYER TYPE FLEXIBLE PLASTIC PACKAGING M&A BY END MARKET
Date Buyer Target Industry / ApplicationEnterprise Value ($mm)
EV / EBITDA
12-Sep-16 Egeria Clondalkin Group Holdings B.V. Food & Beverage - -
7-Sep-16 Liqui-Box Conotainer Sl Food & Beverage - -
24-Aug-16 Berry Plastics Group, Inc. (NYSE:BERY) AEP Industries Inc. (NasdaqGS:AEPI) Industrial 765.0 7.4x
8-Aug-16 Inovar Packaging Group Murray Label & Printing; 21st Century Labels & Packaging; and SafePrints
Food & Beverage - -
1-Aug-16 Kent Precision Foods Group, Inc. PouchTec Industries, LLC Food & Beverage - -
21-Jul-16 Lindsay Goldberg Schur Flexibles Group Food & Beverage - -
18-Jul-16 Plastics Capital plc (AIM:PLA) Synpac Limited Food & Beverage - -
11-Jul-16 Mondi PLC (LSE:MNDI) Uralplastic-N AO Food & Beverage - -
SELECT TRANSACTIONS IN FLEXIBLE PLASTIC PACKAGING
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31 35 24 30 27
7
9
16 7
11
10
5
7
746
49 49 48
43
2012 2013 2014 2015 Q3 YTD ‘15
31
4
8
43
Q3 YTD ‘16
9
Q 3 Y T D ‘ 1 5 Q 3 Y T D ‘ 1 6
4 3 D E A L S 4 3 D E A L S
11%
70%
14%
I N D U S T R I A L
C O N S U M E R
5%M E D I C A L
F O O D &B E V E R A G E
21%
56% 14%
I N D U S T R I A L
C O N S U M E R
F O O D &B E V E R A G E
9%M E D I C A L
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Paper Packaging Transaction Activity
FEATURED SEGMENT TRANSACTIONSSeptember 2016 – Caraustar Industries, a portfolio company of investment firm H.I.G. Capital, has acquired Los Angeles Paper Box. Los Angeles Paper Box manufactures folding cartons and rigid paper packaging products for the food industry. The acquisition adds additional West Coast manufacturing capabilities to the Company’s US footprint and a variety of new custom and stock packaging solutions to Caraustar’s Consumer Packaging business unit. Recent add-on acquisitions made by Caraustar include Recycled Paperboard Solutions and SP Recycling Southeast in 2014. Caraustar is an integrated paperboard manufacturer and was acquired by H.I.G. in 2013.July 2016 – Packaging Corporation of America (NYSE:PKG) has acquired corrugated packaging manufacturer TimBar Corporation for $386 million. TimBar serves the higher margin retail, industrial packaging, and display and fulfillment end markets. As part of the transaction, PCA ac-quired five corrugated manufacturing facilities, two fulfillment centers and four design centers primarily located in the Eastern and Southeastern US. PCA expects synergies resulting from optimized mill capacity and enhanced levels of containerboard integration. The TimBar transaction is the first major corrugated packaging deal completed by PCA since the $2 billion acquisition of Boise Inc. in 2013.
TRENDS IN M&A:• M&A activity in the paper packaging segment grew in Q3 YTD 2016 with 91 transactions, an increase of 9 deals compared to Q3 YTD 2015
• Paper packaging transaction growth was primarily driven by active strategic acquirers in Q3 YTD 2016, with segment deal volume involving a strategic buyer up 10 deals versus Q3 YTD 2015
• Folding carton transactions represented 25% of total paper packaging deals in Q3 YTD 2016, an increase of 12% compared to Q3 YTD 2015, while the proportion of other paper packaging transactions decreased 11% versus the comparison period
Sources: Capital IQ, Thomson Reuters, Company Reports, PMCF
TRANSACTIONS BY BUYER TYPE PAPER PACKAGING M&A BY PACKAGE TYPE
Date Buyer Target Industry / ApplicationEnterprise Value ($mm)
EV / EBITDA
15-Sep-16 Madison Dearborn Partners Powerflute Oyj (AIM:POWR) Corrugated 360.5 6.7x
6-Sep-16 Caraustar Industries, Inc. Los Angeles Paper Box, LLC Folding Cartons - -
26-Aug-16 Salt Creek Capital Pacific Paper Trading Co. Folding Cartons - -
26-Aug-16 Arbor Private Investment Company Dunn Paper, Inc. Other Paper Packaging - -
15-Jul-16 Planet Paper Box Inc. Tri-Cor LLC Corrugated - -
6-Jul-16 Packaging Corporation of America (NYSE:PKG) TimBar Corporation Corrugated 386.0 -
1-Jul-16 KapStone Paper and Packaging Corporation (NYSE:KS)
Central Florida Box Corporation Corrugated - -
1-Jul-16 Hood Container Corp. Action Box Co Inc Corrugated - -
SELECT TRANSACTIONS IN PAPER PACKAGING
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61 72 5579
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193
19
33 213
105 10
57687 85
103
82
2012 2013 2014 2015 Q3 YTD ‘15
70
156
91
Q3 YTD ‘16
11
Q 3 Y T D ‘ 1 5 Q 3 Y T D ‘ 1 6
8 2 D E A L S 9 1 D E A L S
10%
13%
50%
P R I N T I N G /L A B E L S
27%
C O R R U G AT E D
F O L D I N GC A R T O N S
O T H E R PA P E RPA C K A G I N G
15%
25%
44%
P R I N T I N G /L A B E L S
16%
C O R R U G AT E D
F O L D I N GC A R T O N S
O T H E R PA P E RPA C K A G I N G
W W W. P M C F. C O M | 7
Date Buyer Target Industry / ApplicationEnterprise Value ($mm)
EV / EBITDA
15-Sep-16 Pregis LLC Easypack Ltd Machinery/Equipment - -
12-Sep-16 DURAN Group GmbH Kimble Chase Life Science & Research Prod-ucts LLC
Glass 131.0 -
29-Aug-16 Thermoforming Technology Group, LLC NAS Nalle Automation Systems, LLC Machinery/Equipment - -
23-Aug-16 Millstone Capital Advisors, LLC Hardin Industries, Inc. Metal - -
16-Aug-16 Filling Machines & Systems Inc Wild Goose Canning Systems LLC Machinery/Equipment - -
9-Aug-16 Deutsche Beteiligungs AG (DB:DBAN) FRIMO Group GmbH Machinery/Equipment - -
4-Aug-16 Hoover Container Solutions Inc Ferguson Group and CHEP Catalyst & Chemical Containers
Metal 388.0 -
29-Jul-16 Inmark, LLC Container Resources, Inc. Distributor - -
11-Jul-16 Lindenmeyr Munroe Corporation Graphic Paper, Inc. Distributor - -
Other Packaging Transaction Activity
Sources: Capital IQ, Thomson Reuters, Company Reports, PMCF
FEATURED SEGMENT TRANSACTIONSSeptember 2016 – Pregis Corporation, a portfolio company of investment firm Olympus Partners, has acquired United Kingdom-based Easypack Limited. The acquisition will enhance Pregis Corporation’s European packaging machinery product portfolio to include paper void fill, cushioning, and block/brace solutions. Easypack operates 3 manufacturing facilities in the United Kingdom as well as offices and distribution centers in Germany and France. The Easypack transaction was announced within weeks of Pregis Corporation’s agreement to acquire 3M’s temporary pro-tective film business. Pregis Corporation, an international provider of packaging materials and systems, was first acquired by Olympus Partners in 2014.July 2016 – Inmark, a portfolio company of investment firm Quad-C, has acquired rigid packaging distributor Container Resources Inc. South Carolina-based Container Resources offers a variety of plastic, glass, and metal products including bottles, jars, pails, closures, and packaging components. The acquisition is in line with Inmark’s growth strategy to acquire complementary rigid packaging distribution businesses and de-velop the Company’s overall geographic footprint. Inmark has 7 locations in the United States, one in the Netherlands, and one in Singapore. The Container Resources transaction is the first deal completed by Inmark since being acquired by Quad-C in the first quarter of 2016.
TRENDS IN M&A:• M&A activity in other packaging segments, which include machinery/equipment, metal, glass, and distribution, have increased by 9 transactions year over
year from Q3 YTD 2016 to Q3 YTD 2015
• Private equity buyers were a primary driver of increased deal volume through the first three quarters of 2016, as the number of private equity platform and add-on acquisitions were three times higher in Q3 YTD 2016 than experienced in Q3 YTD 2015
• The proportion of total deals involving metal packaging and packaging distribution businesses increased by 24% in Q3 YTD 2016, as compared to Q3 YTD 2015, while volume in the packaging machinery/equipment and glass packaging sectors has declined versus the comparison period
TRANSACTIONS BY BUYER TYPE OTHER PACKAGING M&A BY TYPE
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2012 2013 2014 2015 Q3 YTD ‘15
21
9
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Q3 YTD ‘16
6
Q 3 Y T D ‘ 1 5 Q 3 Y T D ‘ 1 6
3 3 D E A L S 4 2 D E A L S
27%
46%
21%
M E TA L
G L A S S
6%D I S T R I B U T O R
M A C H I N E R Y /E Q U I P M E N T 40%29%
14%
M E TA L
G L A S S17%D I S T R I B U T O R
M A C H I N E R Y /E Q U I P M E N T
SELECT TRANSACTIONS IN OTHER PACKAGING
8 | PAC K AG I N G M & A P U L S E | F I R ST H A L F 2 016
Packaging Stock Market Valuations
Source: Capital IQ ^Based on available Capital IQ Analyst Summaries
PERFORMANCE OF PMCF INDICES VS. S&P 500 KEY TAKEAWAY AND ANALYSIS• Publicly traded packaging companies achieved strong
stock market valuations at the close of Q3 2016, as average EV/EBITDA multiples in Rigid Plastic, Flexible Plastic, Paper Packaging, and Other Packaging exceeded their Q3 2015 and 3 year averages
• Three of the four packaging stock indices tracked by PMCF, the Rigid Plastic, Flexible Plastic, and Other Packaging indices all outperformed the S&P 500 at the close of Q3 2016. The Rigid Plastic Packaging index had the highest relative stock price return in the third quarter of 2016
PACKAGING STOCK MARKET VALUATIONS
Rigid Plastic Packaging: 118.9 Flexible Plastic Packaging: 114.3
Other Packaging: 117.8 Paper Packaging: 102.5
S&P 500 Index: 113.3
60.0
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80.0
90.0
100.0
110.0
120.0
Sep-15 Dec-15 Mar-16 Jun-16
Financials / Metrics ($USD) (09/30/2016) EV / EBITDA Multiples
Company NameHeadquarters
LocationLTM
RevenueLTM
EBITDAMarket
CapPrice/
EarningsQ3
YTD '16Q3
YTD '153 Year
Average
Rigid Plastic PackagingAptarGroup, Inc. United States 2,339$ 473$ 4,872$ 25.1x 11.6x 9.7x 10.3xBerry Plastics Group, Inc. United States 6,067 1,045 5,337 26.2x 10.6x 9.5x 10.0xNampak Limited South Africa 1,392 205 871 9.1x 6.9x 9.8x 9.6xRPC Group Plc United Kingdom 2,694 385 4,129 49.7x 17.5x 13.3x 12.0xSilgan Holdings Inc. United States 3,637 460 3,060 19.7x 10.6x 9.8x 9.7xRigid Plastic Packaging Average 26.0x 11.4x 10.4x 10.3x
Flexible Plastic PackagingAEP Industries Inc. United States 1,089$ 107$ 559$ 14.6x 6.6x 6.4x 8.6xAmcor Limited Australia 9,421 1,380 13,379 54.5x 12.1x 10.7x 11.8xBemis Company, Inc. United States 3,999 588 4,831 21.8x 10.9x 8.9x 9.5xTranscontinental Inc. Canada 1,538 293 1,039 7.2x 4.4x 4.5x 4.5xHuhtamaki Oyj Finland 3,174 432 4,840 23.9x 13.4x 12.8x 11.5xSealed Air Corporation United States 6,788 1,083 9,013 26.1x 12.5x 12.4x 12.0xWinpak Ltd. Canada 813 194 2,171 21.7x 10.7x 11.3x 11.4xFlexible Plastic Packaging Average 24.2x 10.1x 9.6x 9.9x
Paper PackagingCascades Inc. Canada 3,045$ 324$ 923$ 22.1x 6.0x 7.2x 6.8xGraphic Packaging Holding Co. United States 4,266 738 4,464 18.1x 9.1x 8.7x 9.0xInternational Paper Company United States 21,141 2,926 19,729 25.8x 8.7x 6.5x 7.5xKapStone Paper and Packaging Co. United States 3,064 361 1,827 22.3x 8.9x 7.6x 9.6xGreif, Inc. United States 3,325 423 2,612 30.1x 8.8x 6.8x 7.5xMondi plc United Kingdom 7,410 1,465 10,233 14.0x 8.5x 9.6x 8.6xPackaging Corporation of America United States 5,693 1,124 7,590 17.3x 8.6x 7.1x 8.7xWestRock Company United States 14,172 2,260 12,057 35.4x 7.4x 9.8x 7.7xSmurfit Kappa Group plc Ireland 9,204 1,344 5,236 10.7x 6.7x 8.1x 7.4xSonoco Products Company United States 4,942 640 5,296 25.0x 9.7x 7.6x 8.5xPaper Packaging Average 22.1x 8.2x 7.9x 8.1x
Other PackagingBall Corporation United States 8,405$ 1,243$ 14,278$ 37.8x 17.2x 10.6x 11.3xCrown Holdings Inc. United States 8,388 1,329 7,974 17.5x 10.1x 10.1x 10.2xOwens-Illinois, Inc. United States 6,686 1,160 2,981 14.9x 7.4x 6.9x 7.3xToyo Seikan Group Holdings, Ltd. Japan 7,796 854 3,549 37.6x 5.4x 7.5x 6.9xOther Packaging Average 27.0x 10.0x 8.8x 8.9x
W W W. P M C F. C O M | 9
Overall Private Equity M&A Trends
OVERALL PRIVATE EQUITY:
• Overall US private equity deal value has remained steady in 2016, reflecting a move toward larger average deal sizes versus 2015, as deal volume has steadily declined through the first three quarters of the year
• Overall M&A transaction valuations, including private equity, have continued to increase. Q3 YTD 2016 median M&A multiples are 11.2x, representing the highest level since at least 2010 and are up from 10.2x in 2015
• Capital raised by U.S. private equity sponsors was $142 billion in Q3 YTD 2016 up from $130 billion in Q3 YTD 2015 - representing a 9% increase. Run-rate Private equity fundraising is near 2015 levels reflecting continued investor optimism in the investment model. The increase in funds raised should reflect continued private equity buyer activity in the broader M&A market as well as within the packaging industry
PACKAGING PRIVATE EQUITY TRENDS:
• Private equity buyers were highly active in the packaging industry in Q3 2016, as transactions completed by financial buyers surpassed the highest quarterly level recorded in the last 2 years
• Through the first three quarters of 2016, financial buyers contributed 79 of the 229 deals through both platform and add-on acquisitions. These transaction levels were up by 11 deals, compared to Q3 YTD 2015, driven by an increasing number of private equity add-on acquisitions
• The demonstrated commitment of private equity to the packaging industry highlights the broad appeal of packaging companies to a broad buyer base. PMCF continues to see strong interest from private equity buyers for quality assets with strong market positions
Source: Pitchbook, PMCF Estimates
0
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800
2011 2012 2013 2014 2015$4
11
$164
$470
$511
$644
$642
$488
# O F D E A L S C L O S E DD E A L VA L U E( $ B i l l i o n s )
0
1
2
3
4
5
2,980
3,379 3,276
4,037 4,023
Q3 YTD ’15 Q3 YTD ’16
$296
$484
3,034
2,477
PRIVATE EQUITY ACQUISITIONS: DEAL COUNT AND AMOUNT INVESTED
PRIVATE EQUITY M&A ACTIVITY IN PACKAGING
U.S. PRIVATE EQUITY FUNDRAISING: CAPITAL RAISED
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$87
$104
$205
$195
$193
$130
C A P I TA L R A I S E D( $ B i l l i o n s )
Q3 YTD ’15 Q3 YTD ’16
$142
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40
Q3 ‘16
18
10
11
9
19
10
10
9
10
9
15
10
15
20
P E % T O TA L PA C K A G I N G D E A L SP R I VAT E E Q U I T Y P L AT F O R M P R I VAT E E Q U I T Y A D D - O N
0%
20%
40%
60%
80%
100%
8
522
8
Q2 ‘16Q1 ‘16Q4 ‘15Q3 ‘15Q2 ‘15Q1 ‘15Q4 ‘14Q3 ‘14
35
25
19
13
19
29
20
3028
10 | PAC K AG I N G M & A P U L S E | F I R ST H A L F 2 016
Our U.S. Locations
DETROITP&M Corporate FinanceTwo Towne SquareSuite 425Southfield, MI 48076Phone: 248.223.3300
CHICAGOP&M Corporate Finance225 W. Washington Street Suite 2700Chicago, Illinois 60606Phone: 312.602.3600
WWW.PMCF.COM | 11
Use our expertise to create and maximize shareholder value.
PMCF is ready to guide you through the complex process of a company sale by bringing industry expertise, information, and insight gained from 20 years of experience and the nearly 200 transactions we have successfully completed.
• PMCF is frequently requested to complete ananalysis of a company’s strategic positioning within the packaging marketplace
• Our review may consider your operations, products, end markets, financial trends, growth opportunities, and management team
• We are available to brief your management team, ownership, or board with our thoughts on your current value in today’s market
• PMCF can provide a benchmark comparison of your organization’s strengths, weaknesses, and anticipated buyer viewpoints
• PMCF is a licensed and FINRA-registered investment banking organization
• Confidentiality is of the highest importance and we welcome the execution of appropriate agreements prior to the exchange of data
• Our advisory services are generally provided on a no-fee basis as we work toward our goal of demonstrating long term value
• PMCF’s senior bankers will respond to any inquiries and will be directly involved in all discussions
• If engaged, the majority of PMCF’s costs are contingent on a successful transaction
• We insist on potential clients contacting our references
Sale Readiness Assessment Working with PMCF
PMCF Sale Readiness Assessment
Our Chicago & Detroit Offices
DETROIT P&M Corporate Finance, LLC Two Towne Square Suite 425 Southfield, MI 48076 Phone: 248.223.3300
Contact Information
CHICAGO P&M Corporate Finance, LLC 225 W. Washington Street Suite 2700
Chicago, Illinois 60606 Phone: 312.602.3600
OUR CHICAGO & DETROIT OFFICES
PMCF’s Value and Approach
PMCF’s M&A advisory services are designed to provide company shareholders with a trusted advisor to oversee
all transaction related aspects of a company sale or strategic acquisition. Our service levels, industry expertise
in packaging, and approach to managing transactions goes well beyond a typical investment banker. See
below for some examples of our differentiation:
• Proven Track Record with 100% Closing Rate on all Packaging Sale Transactions Since 2010
• Tailored Sale Process Provides for Extensive Upfront Preparation, Detailed Company Positioning, and Buyer Evaluation/Diligence
• Direct Access and Credibility with Most of the Packaging Consolidators and Top Middle Market Players
• Deep Industry Knowledge and Research Provides Increased Leverage on Both Sides of the Transaction
• Service Model is Designed to Provide a High Level of Senior Banker Involvement Throughout Every Step of the Transaction
• Long Term Consultative Approach Allows Us to Provide Unbiased Feedback
W W W. P M C F. C O M | 11
Recent PMCF Awards
CROSS BORDER M&A DEAL OF THE YEAR(Over $50MM - $100MM)
CROSS BORDER CORPORATE AND STRATEGIC ACQUISITION DEAL OF THE YEAR(From $10MM - $25MM)
ACG’S 2016 ALL-STAR DEAL OF THE YEAR(Revenue over $50MM)
SELECT PMCF PACKAGING TRANSACTIONS:
THE M&A ADVISOR INTERNATIONAL M&A AWARDS
AND
P&M CORPORATE FINANCE | CONFIDENTIAL | PAGE 1
Has completed a recapitalization with Has been acquired by
Has been acquired byHas been acquired by
Has completed a recapitalization with Has been acquired by
Has been acquired byHasacquired
Has been acquired by
SELECT CLIENT FEEDBACK“We are very pleased with PMCF’s representation of Tri-Delta through every step of the sale process. John and his team helped us prepare for and execute a process that led to a successful outcome for all parties involved. They are clearly experts in the packaging industry and I’d be surprised if there is a better firm out there with their capabilities.”
Thomas Dolan, Former Owner and President, Tri-Delta Plastics
“PMCF provided outstanding service and guidance to Skybox at every stage of the transaction. Their senior team proved to be well connected in corrugated packaging with executive contacts throughout the industry. We very highly recommend PMCF to any packaging organization considering a transaction.”
Marc Miller, President and Shareholder, Skybox Packaging
“We consider ourselves fortunate to have located and retained PMCF to represent our Company. They helped us prepare for and execute each step of a once in a lifetime transaction. They are clearly experts in our industry and we would highly recommend them to anyone considering a transaction in plastic packaging.”
Pete Haas, Former Shareholder and President, Hillside Plastics
2016 M&A ATLAS AWARDS AMERICAS MIDDLE MARKETS PRIVATE EQUITY DEAL OF THE YEAR
This market overview is not an offer to sell or a solicitation of an offer to buy any security. It is not intended to be directed to investors as a basis for making an investment decision. This market overview does not rate or recommend securities of individual companies, nor does it contain sufficient information upon which to make an investment decision.P&M Corporate Finance, LLC will seek to provide investment banking and/or other services to one or more of the companies mentioned in this market overview.P&M Corporate Finance, LLC, and/or the analysts who prepared this market update, may own securities of one or more of the companies mentioned in this market overview. The information provided in this market overview was obtained from sources believed to be reliable, but its accuracy cannot be guaranteed. It is not to be construed as legal, accounting, financial, or investment advice. Information, opinions, and estimates reflect P&M Corporate Finance, LLC’s judgment as
of the date of publication and are subject to change without notice. P&M Corporate Finance, LLC undertakes no obligation to notify any recipient of this market overview of any such change.The charts and graphs used in this market overview have been compiled by P&M Corporate Finance, LLC solely for illustrative purposes. All charts are as of the date of issuance of this market overview, unless otherwise noted.The PMCF Plastics Index may not be inclusive of all companies in the plastics industry and is not a composite index of the Plastic industry sector returns. Index and sector returns are past performance which is not an indicator of future results.This market overview is not directed to, or intended for distribution to, any person in any jurisdiction where such distribution would be contrary to law or regulation, or which would subject P&M Corporate Finance, LLC to licensing or registration requirements in such jurisdiction.
Suite 425Two Towne SquareSouthfield, MI 48076
WWW.PMCF.COM
