Packaging Industry Update

Introduction

Harris Williams is pleased to present our packaging industry update for November 2019.  This report provides commentary and analysis on current capital market trends and merger and acquisition dynamics within the global packaging industry. Overall, M&A activity in the packaging industry remains elevated in 2019, driven by strong secular trends globally. In this report we highlight two of these trends: the rise of the packaging automation and robotics market, which is expected to grow at 13% annually between 2015 and 2025, and the strong forecasted growth in flexible packaging consumption in North America, projected to grow at 3.8% from 2018 to 2023. We hope you find this edition helpful and encourage you to contact us directly if you would like to discuss our perspective on current industry trends or our relevant industry experience.

2019 by the Numbers1,2

  • 150 YTD packaging acquisitions
  • 4 LTM transactions over $1 billion
  • 12% 2019 YTD year-over-year increase in announced global packaging M&A volume

HW Spotlight: Pack Expo 2019

screen_shot_2019-12-03_at_4.10.55_pm.png

Harris Williams attended PACK EXPO in Las Vegas in September 2019. Our takeaways from the convention are featured in a “30K Feet” profile

Covered topics include:

  • Healthcare plastics and packaging
  • Automated equipment
  • Cold chain
  • Software integration and data analytics

Our Practice

Harris Williams is a leading advisor to the packaging industry. Our significant experience covers a broad range of end markets, industries, and business models.

Packaging Types

  • Bags
  • Bottles & Cans
  • Caps & Closures
  • Flexible
  • Labels
  • Pouches
  • Rigid

Materials

  • Films
  • Foil
  • Glass
  • Laminations
  • Metal
  • Paper
  • Plastics

Applications

  • Cosmetics
  • E-Commerce
  • Food & Beverage
  • Healthcare
  • Industrial
  • Other

Strong Momentum Across the Packaging Industry

screen_shot_2019-12-03_at_4.16.41_pm.png

What We’re Reading

Solutions to the Plastic Packaging Conundrum Vary

Packaging Digest  11/19/2019

"We’re drowning in plastic packaging waste, according to some sources, and need to act now to fix it."

From non-plastic alternatives to increased recycling, Packaging Digest explores potential solutions to the plastic packaging conundrum.

Read the full article here.

Plastic Bans: A Threat or an Opportunity for Contract Packagers?

Packaging World  11/6/2019

California’s recent ban on travel-sized hotel toiletries is expected to be adopted by New York and Canada.  As the shift against plastic and single-use packaging continues, contract packagers that can provide innovative and adaptable solutions will outpace business-as-usual providers.

Read the full article here.

Eight Global Packaging Trends and Where They’re All Heading

Packaging Digest  10/17/2019

"First impressions count, and for many brands, this puts high importance on the product packaging. As with all forms of marketing, it shifts and changes due to customers’ tastes and global sentiments."

Click the link below for eight key trends that brands must pay attention to.

Read the full article here.

Packaging Trends 2020: What Does the Industry Predict for Next Year?

Packaging Gateway  10/1/2019

"Every year industry sectors worldwide gear up to predict the next big trends to govern the coming year. Here, Packaging Gateway speaks to companies working in the packaging sector to forecast some of the top packaging trends for 2020."

Read the full article here.

All About the Box: Increasing Medication Safety with Packaging Considerations

Packaging Europe  8/13/2019

Packaging plays a crucial role in keeping patients safe. Dangerous storage conditions, medication tampering and the production of counterfeit medicine can all occur when packaging is not as effective as it should be. What can we do to prevent these problems before they jeopardize public health?

Read the full article here.

Key Themes

screen_shot_2019-12-03_at_4.21.20_pm.png

M&A Activity In The Packaging Industry1, 2

  • M&A activity in the packaging space remains robust.
  • On an LTM basis as of November 2019, 167 deals have been announced in the global packaging industry vs. 149 for the prior year
  • YTD announced deal volume as of November 2019 has grown 11.9% over the same period the prior year
  • Four deals over $1 billion have been announced or closed in the last twelve months
  • Packaging industry M&A remains robust globally, with the majority of LTM August 2019 targets located in Western Europe (50%), North America (34%), and the Asia Pacific region (16%).

 

screen_shot_2019-12-03_at_4.22.53_pm.png

Global CPG Packaging Customers Embrace Robotics3,4

  • The automation and robotics market continues to grow, creating significant demand for packaging automation equipment and packaging designed to withstand automated handling
  • Processing operations and secondary packaging have seen the greatest growth in robotics over the past five years
  • CPG packaging customers are increasingly making investments in robotics to maintain competitive positioning, increase production capacity, reduce labor shortages, and expand margins
  • As volume and productivity standards increase, CPG packaging customers are using robotic capabilities for repetitive, non-ergonomic tasks, allowing human workers to handle activities of higher value add
  • With advances in automation, CPGs can create a wider range of products, packaged in containers of any size, without sacrificing overall efficiency and design

 

screen_shot_2019-12-03_at_4.24.09_pm.png

North American Packaging Market Grows5

  • North America's flexible packaging market is predicted to achieve a compound annual growth rate of 3.8% over the next five years, to reach over $30bn in 2023
  • Sales in the North American region accounted for almost 30% of total global sales
  • The industry is likely to come under increasing margin pressure as competition intensifies and brand owners continue to drive down their costs
  • Flexible packaging continues to be a hotbed for mergers and acquisitions, which is changing the structure of this still fragmented and over-supplied industry
  • Companies are repositioning their assets, rationalizing and restructuring their businesses, often involving the divestment of non-core activities and the addition of strategic bolt-on acquisitions

Public Comparables1

As of November 19, 2019 ($ in millions, except per share amounts)

picture1_171.png

Public Markets Overview1

screen_shot_2019-12-03_at_4.28.11_pm.png

screen_shot_2019-12-03_at_4.28.39_pm.png

Select M&A Activity1,2

screen_shot_2019-12-03_at_4.29.35_pm.png

1. Capital IQ

2. MergerMarket

3. PMMI Business Intelligence

4. Packaging World

5. European Plastic Product Manufacturer

 

The information and views contained in this report were prepared by Harris Williams LLC (“Harris Williams”). It is not a research report, as such term is defined by applicable law and regulations, and is provided for informational purposes only. It is not to be construed as an offer to buy or sell or a solicitation of an offer to buy or sell any securities or financial instruments or to participate in any particular trading strategy. The information contained herein is believed by Harris Williams to be reliable but Harris Williams makes no representation as to the accuracy or completeness of such information. Harris Williams and/or its affiliates may be market makers or specialists in, act as advisers or lenders to, have positions in and effect transactions in securities of companies mentioned herein and also may provide, may have provided, or may seek to provide investment banking services for those companies. In addition, Harris Williams and/or its affiliates or their respective officers, directors and employees may hold long or short positions in the securities, options thereon or other related financial products of companies discussed herein. Opinions, estimates and projections in this report constitute Harris Williams’ judgment and are subject to change without notice. The securities and financial instruments discussed in this report may not be suitable for all investors and investors must make their own investment decisions using their own independent advisors as they believe necessary and based upon their specific financial situations and investment objectives. Also, past performance is not necessarily indicative of future results. No part of this material may be copied or duplicated in any form or by any means, or redistributed, without Harris Williams’ prior written consent.

Harris Williams LLC is a registered broker-dealer and member of FINRA and SIPC. Harris Williams & Co. Ltd is a private limited company incorporated under English law with its registered office at 5th Floor, 6 St. Andrew Street, London EC4A 3AE, UK, registered with the Registrar of Companies for England and Wales (registration number 07078852). Harris Williams & Co. Ltd is authorized and regulated by the Financial Conduct Authority. Harris Williams & Co. Corporate Finance Advisors GmbH is registered in the commercial register of the local court of Frankfurt am Main, Germany, under HRB 107540. The registered address is Bockenheimer Landstrasse 33-35, 60325 Frankfurt am Main, Germany (email address: hwgermany@harriswilliams.com). Geschäftsführer/Directors: Jeffery H. Perkins, Paul Poggi. (VAT No. awaited). Harris Williams is a trade name under which Harris Williams LLC, Harris Williams & Co. Ltd and Harris Williams & Co. Corporate Finance Advisors GmbH conduct business.