The top five biggest packaging industry deals in the final quarter of 2019 accounted for 88.5% of the total deals done during this period
According to GlobalData, packaging sector deals made in the fourth quarter of 2019 were worth more than $2bn (Credit: Pixabay)
The fourth quarter of 2019 saw deals within the packaging industry worth $2.73bn, according to market research company GlobalData
This represents a 17.2% increase on the previous quarter, but a fall of 58.3% when compared to $6.55bn for the same period in 2018.
In value terms, the Asia-Pacific led the way with deals worth $1.91bn.
Of the full valuation, the top five packaging deals accounted for 88.5% of its worth — accounting for a total of $2.41bn.
From purchasing fibre businesses to woven polypropylene, NS Packaging looks at the top five deals to take place in the fourth-quarter period of 2019.
Biggest packaging deals in the final quarter of 2019
1. Nippon Paper’s acquisition of Orora’s fibre-based packaging business
In October 2019, Japanese paper manufacturer Nippon Paper signed an agreement with Australian packaging firm Orora to purchase its paperboard fibre-based business.
The acquisition, worth about $1.1bn, includes its fibre converting, speciality packaging, cartons, bags, and functional coatings operations.
In a statement, Nippon Paper said: “Through the acquisition of the business, Nippon Paper Group will be entering the integrated corrugated paperboard manufacturing business in the Oceania region.
“Nippon Paper seeks not only to augment the synergistic effects with AP but also plans to further build the group’s packaging business on a global scale.”
The deal is currently subject to final approval with the relevant authorities, with it expected to be finalised before the end of March 2020.
2. Sae-A Trading purchases Tailim Packaging and Tailim Paper
South Korean clothing maker Sae-A Trading acquired a 71% stake in Tailim Packaging in September 2019.
The deal also comes with a 100% stake in Tailim Paper.
South Korea’s biggest fibreboard makers Tailim Packaging and Tailim Paper were first put up for sale in May 2019 by then-owner IMM Private Equity.
Speaking to The Korea Times, the investment firm’s managing director, Jay Kim, said: “As an individual founder took control of the company for 40 years, its corporate governance structure was inefficient as those of most medium-sized firms.
“Its 12 factories were buying raw materials separately, so most of its spending was unnecessary.
“We enhanced its efficiency through integrated management of the 12 factories.”
The completed deal was worth $583m.
3. Verso’s paper division acquired by Pixelle Specialty Solutions
In November 2019, US-based paper manufacturer Pixelle Specialty Solutions expanded the number of paper mills it owns through the acquisition of the Verso Corporation’s speciality paper business.
The purchase from the paper coatings company, worth $400m, sees Pixelle take ownership of two mills in the US states of Maine and Wisconsin.
Commenting on the deal, Pixelle president Tim Hess said: “We are very excited about the new speciality capabilities and talented workforce that will be added to our portfolio.
“With Lindsay Goldberg’s resources, industry experience and management talent, combined with Pixelle’s skilled workforce and world-class assets, we are building a high-performance, specialised business for our customers.”
Pixelle was formed by private investment firm Lindsay Goldberg in 2018.
4. TC Transcontinental sells divisions to Hood Packaging
In November 2019, food packaging specialists Hood Packaging reached an agreement with packaging and commercial printing company TC Transcontinental to purchase its paper and woven polypropylene packaging operations.
Speaking at the time, TC Transcontinental CEO and president Francois Olivier said: “After operating the paper business for almost 18 months, we concluded that it is less core to our packaging sector’s growth strategy.
“As such, our decision to sell these assets is aligned with our plan to continue building our flexible packaging platform where we see good growth potential.
“In addition, this transaction will enable us to deleverage our balance sheet faster than expected and give us the flexibility to continue acquiring businesses that are more complementary to our existing flexible packaging portfolio.”
The deal between the two Canadian businesses, worth $180m, was completed in early 2020.
5. Cascades purchases further shares in Greenpac Holding
In December 2019, Canadian packaging and tissue manufacturer Cascades exercised its option to purchase the interest of investment firm Caisse de dépôt et placement du Québec (CDPQ) in Greenpac Holding.
Cascades already owned a majority interest of 66.1% in the lightweight container mill, with the $93m purchase giving the company a further 20.2% interest in its operations.
The firm’s president and CEO, Mario Plourde, said: “This transaction is an important part of Cascades’ strategic plan, and will improve our available cash flow.
“This decision is another step in a series of actions that we have carried out over the past few years to improve our position in an increasingly competitive market.”
The Niagara Falls-based Greenpac venture was created in joint partnership with Cascades and CDPQ, alongside Jamestown Container Companies and Containerboard Partners.