The rate of packaging mergers and acquisitions remained strong in the first half of 2017, and is looking good for the rest of the year as well, according to market experts with Mesirow Financial.
Chicago-based Mesirow in its mid-year review — released July 27 — tracked 136 first-half packaging deals. That puts the market on pace to match its levels of 2010-16, when it recorded between 240 and 300 deals per year. 2015 was the exception to that trend, with 322 deals.
First-half earnings multiples paid in packaging deals averaged 8.6x, according to Mesirow. That's slightly ahead of the 8.5x level of 2015 and well ahead of the 2010-15 range of 6.5x-7.7x.
"Looking toward the second half of 2017, we believe that the underlying market conditions driving M&A activity will remain healthy," Mesirow officials said in the report. "The primary near-term focus for many corporations will be generating growth through targeted acquisition strategies."
Mesirow officials added that the outcome of the 2016 U.S. presidential election "is expected to have a positive long-term impact on the overall level of M&A activity in the coming years."
"Despite the Trump administration's legislative difficulties, a relaxed regulatory environment and the expected restructuring of specific components of the U.S. corporate tax code is expected to fuel continued robust deal-making conditions," they explained.
Private equity investors "continue to be enamored with the plastics and packaging sector," in spite of a competitive deal-making environment officials said. They added that "the fragmented, yet consolidating flexible packaging industry has seen a consistently strong level of activity in the number of completed M&A transactions over the past 18 months."
Recent plastics packaging deals involving Mesirow include the sale of Trinity Packaging Corp. to ProAmpac — where Mesirow represented Trinity — and Fisher Container Holdings LLC's purchase of Packaging Products Corp. Mesirow represented PPC in that deal.
