Packaging Perspectives
JANUARY 2014
ELEVATE Your Experience.
FEATURE REPORT
2013: Year-End Review
There was certainly no lack of merger and acquisition (“M&A”)
activity in the packaging industry during 2013. Several forces
combined to push M&A deal totals well above levels reached in
2012 (see Chart 1). Prominent drivers included a rising stock
market, low interest rates, accommodative credit markets, active
private equity groups and the constant search for growth amongst
industry participants. While the year did not feature some of
the multi-billion dollar blockbuster deals of 2010 and 2011 (i.e.
RockTenn/Smurfit-Stone, International Paper/Temple-Inland
and Rank Group/Graham Packaging), there were numerous
transactions in every shape and stripe.
CHART 1
Total Global Packaging M&A Deal Volume
$ in billions
$4.0
$3.5
$2.0
$24.4
$19.3
$18.4
$18.4
$21.7
$1.5
$1.0
Public Paper and Plastic Packaging Companies:
Average EBITDA Multiples
EV / EBITDA Multiple
10.0x
9.0x
8.0x
7.0x
6.0x
5.0x
4.0x
3.0x
2.0x
1.0x
0.0x
6.1x
6.7x
2009
Paper Packaging
6.1x
2010
8.9x 8.9x
8.2x
7.5x
7.4x
Plastic Packaging
6.2x
2011
7.0x
2012
2013
Source: Capital IQ, Mesirow Financial
Plastic Index Includes: Ball Corporation, Bemis Company, Crown Holdings, Sealed Air Corporation,
Silgan Holdings, Winpak.
Paper Index Includes: Greif, International Paper, MeadWestvaco, Packaging Corporation of
America, RockTenn.
CHART 3
$0.5
$0.0
CHART 2
$28.4
$3.0
$2.5
must find ways to grow their businesses and placate shareholders.
As demonstrated in Chart 2, valuation multiples for publiclyheld packaging companies reached five year highs, and certainly
contributed to the deals detailed below in Chart 3.
Strategic Transactions
2008
2009
2010
2011
2012
2013
Source: Capital IQ, Mesirow Financial
Mesirow Financial has identified five major categories of packaging
M&A activity that shaped the deal landscape in 2013: 1) Strategic
Transactions, 2) Private Equity Platforms, 3) Private Equity AddOns, 4) International Expansion Transactions and 5) Special
Situations. Each one of these categories demonstrated healthy
levels of activity during 2013.
Strategic Transactions
Acquirer
Target
Sector
Bunzl
Schwarz Paper
Paper Distribution
CCL
Avery Dennison
Labels
Amcor
AGI/Shorewood
Tobacco Packaging
Filtrona
Contego Healthcare
Pharmaceutical Packaging
Pactiv
Spirit
Foodservice Packaging
Georgia Pacific
Buckeye Technologies
Pulp
Kapstone
Longview
Containerboard
Silgan
Portola
Caps and Closures
PCA
Boise
Containerboard
Berry Plastics
Graphic Flexibles
Flexible Packaging
This category remains at the core of the deal environment. Many
of these participants are publicly-held companies and simply
Continued on page 3
IN THIS ISSUE
Feature Report.................................................................................................1
Featured Mesirow Financial Deals.....................................................................2
353 North Clark Street | Chicago, Illinois 60654 | 312.595.6000 | mesirowfinancial.com
2
January 2014
FEATURED MESIROW FINANCIAL DEALS
Expera Specialty Solutions, LLC Acquires Wausau Paper Corp. Specialty Paper Business
•n
Mesirow Financial, Inc. acted as the exclusive financial advisor to Wausau Paper Corp.
(“Wausau”) in the sale of its specialty paper business (“WPM”) to Expera Specialty
Solutions, LLC (“Expera Specialty Solutions”), a newly formed company sponsored by
KPS Capital Partners, LP, a New York-based private equity firm.
•n
Based in Mosinee, Wisconsin, WPM provides a range of highly specialized paper
products to the food, industrial & tape and coated & liner markets across a broad range
of product categories and specific end-use applications.
•n
a portfolio company of
Simultaneously, Expera Specialty Solutions acquired Packaging Dynamics’ Thilmany
Papers business unit, including manufacturing facilities in Kaukana and De Pere,
Wisconsin.
•n
Expera Specialty Solutions is the leading North American manufacturer of specialty
paper products for use in the tape, pressure-sensitive release liner, industrial and food
packaging segments. Expera Specialty Solutions’ manufacturing platform includes
machines at four mills located in Rhinelander, Mosinee, Kaukauna and De Pere,
Wisconsin.
— Sell-side Advisor —
•n
The sale of WPM demonstrates Mesirow Financial Investment Banking’s deep
understanding of the specialty paper market and ability to facilitate a complex transaction
with a financial sponsor.
SPECIALTY PAPER BUSINESS
has been acquired by
MEI Labels Holdings, LLC Acquires The Venture Corporation
•n
Mesirow Financial acted as the exclusive financial advisor to The Venture Corporation
(“TVC”) on its partnership with MEI Labels Holdings, LLC (“MEI Labels”), a portfolio
company of Svoboda Capital Partners LLC, a Chicago-based private equity firm.
•n
Based in Lewisville, Texas, TVC is a full-service manufacturer and premier provider of
print, label and packaging solutions for customers in the health and beauty, consumer
goods and pet care end markets, among others.
•n
MEI Labels is a leading provider of pressure sensitive label products, inserts, tags,
banners and other products, including silk screening and embroidery. Located in
Catoosa, Oklahoma, MEI Labels has grown significantly since its inception, becoming
a national label printing platform, serving a diverse set of customers across the United
States, including many in the food / grocery, industrial, packaging and retail markets.
•n
This transaction highlights Mesirow Financial Investment Banking’s ability to position
middle market clients as attractive tuck-in acquisition candidates for private equityowned strategic buyers.
has been acquired by
a portfolio company of
— Sell-side Advisor —
CONTACT US
William Hornell
Managing Director
Direct–312.595.6176
bhornell@mesirowfinancial.com
Rocky Pontikes
Managing Director
Direct–312.595.6821
rpontikes@mesirowfinancial.com
Sarah Baker
Vice President
Direct–312.595.7159
spbaker@mesirowfinancial.com
Louis Mitchell
Managing Director
Direct–312.595.6025
lmitchell@mesirowfinancial.com
Rick Weil
Managing Director
Direct–312.595.6131
raweil@mesirowfinancial.com
Adam Oakley
Vice President
Direct–312.595.6692
aoakley@mesirowfinancial.com
Brian Price
Vice President and
Chief Operating Officer
Direct–312.595.6545
bprice@mesirowfinancial.com
January 2014
3
2013: YEAR-END REVIEW continued from page 1
Private Equity Platforms
CHART 6
The transactions listed in Chart 4 represent new platforms for
private equity sponsors. The fund raising market improved in 2013
and it is estimated that private equity groups now have record levels
of cash available for investment. The packaging industry remains
very attractive for private equity given the industry’s stability,
growth prospects and profitability.
International Expansion Transactions
Acquirer
Target
Location
Amcor
Shenda Enterprise
China
Amcor
Tuflex
India
Bemis
Foshan
China
Multi-Color
LabelMakers
Australia
CHART 4
Multi-Color
John Watson
Scotland
Private Equity Platform Transactions
Multi-Color
Gern & Cie
Switzerland
Domtar
Indas
Spain
Scholle
Flexpack
Brazil
Graphic Packaging
Contego Beverage
Europe
Acquirer
Target
Sector
H.I.G.
Caraustar
Paperboard
Blue Wolf / Atlas Holdings
Twin Rivers Paper
Tissue
Peak Rock
Atlas Tissue Mills
Tissue
KPS
Expera
Specialty Paper
Cove Point
Bemis Clysar
Specialty Films
Arbor Investments
Keyes Packaging
Food Packaging
Carlyle
Chesapeake
Cartons/Specialty
Madison Dearborn
Multi Packaging Solutions
Cartons/Specialty
Graham Partners
Comar
Healthcare Packaging
Mason Wells
Sealed Air Medical
Medical Packaging
American Securities
Tekni-Plex
Specialty Films
Jordan Co.
Transilwrap
Specialty Coatings
Private Equity Add-Ons
Once these platforms have been acquired, it is not uncommon to
see the new private equity-owned businesses make acquisitions.
Many significant industry participants in the packaging industry
have been built by this approach (Paperworks, Exopack, Berry
Plastics, Clondalkin, Ampac, Fort Dearborn, WS Packaging).
Given the accommodative credit markets available during 2013,
it was not surprising to see several add-on transactions as well (see
Chart 5).
CHART 5
Private Equity Add-On Transactions
Sponsor
Acquirer
Target
Frazier Healthcare
Packaging Coordinators
Anderson Brecon
One Equity
Constantia
Spear
Wind Point Partners
Hilex Poly
Clondalkin Flexibles
Olympus
Waddington
Par Pak
Svoboda Capital
MEI Labels
TVC One
KRG
Fort Dearborn
AC Label
Metalmark
Hoffmaster
Graphic Management
Special Situations
There were also several unique packaging transactions in 2013 that
added to the deal landscape. Sun Capital Partners is merging five of
its specialty packaging businesses together under the Coveris name
to form the sixth largest plastics packaging business in the world.
Multi Packaging Solutions and Chesapeake have announced their
merger which will form a $1.4 billion global specialty packaging
business. Additionally, International Paper has indicated that
progress is continuing on the merger of xpedx and Unisource.
Valuations
Not surprisingly, it was another strong year for deal valuations in
2013. Given the deal drivers discussed in this article, sellers were
able to obtain valuations consistent with the high levels obtained
in 2011 and 2012 (see Chart 7). There was a slight dip in 2013
financial buyer multiples due to an increase in specialty paper
transactions relative to 2011 and 2012.
CHART 7
Average EV / EBITDA Multiples for Packaging M&A Transactions
EV / EBITDA Multiple
10.0x
8.7x
9.0x
8.0x 7.2x 7.5x 7.4x
7.0x
6.0x
5.0x
4.0x
3.0x
2.0x
1.0x
0.0x
2006
2007
Financial
6.6x
7.2x
6.5x
Strategic
6.2x
6.8x
6.5x
7.2x
6.8x
7.2x
6.5x
7.1x
5.3x
2008
2009
2010
2011
2012
2013
Source: Capital IQ, Mesirow Financial
International Expansion
Since the financial crisis, there has been an increase in the use of
M&A to accomplish international growth objectives (see Chart 6).
Companies such as International Paper, MeadWestvaco, Graphic
Packaging, CCL, Amcor, Bemis and Smurfit Kappa have all
been consistent acquirers of international businesses. This is not
surprising given the divergence in economic growth rates around
the world.
Outlook for 2014
It is difficult to imagine a better environment for packaging M&A
transactions. Between high stock prices, high public company
valuation multiples, record levels of private equity to invest,
encouraging economic growth forecasts and low interest rates,
there is no reason to anticipate a slowdown in activity. In addition
to the current deal environment, many of these transactions are
creating value for the purchasers. Companies like RockTenn,
Kapstone, Amcor, Bemis, Graphic Packaging, Multi-Color and
Berry Plastics are all using M&A to drive their business models.
We expect this trend to continue.
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Mesirow Financial continues to be a leader in assisting
paper, plastics, packaging and specialty printing companies
with merger and acquisition transactions. Our experienced
professionals have completed nearly 100 packaging transactions
in recent years, and we are consistently focused on elevating the
experience for our clients.
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