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Packaging Update: First Quarter 2014

Deloitte Corporate Finance LLC


This quarter’s Packaging Update, produced by Deloitte Corporate Finance LLC (DCF), summarizes recent transactions within this industry along with information on active buyers, current transaction valuation multiples and an overview of the public market’s perception of the industry.

Highlights include:

Divestitures of non-core assets are expected to continue
  • Improving economic conditions and accelerating M&A markets are allowing many companies to divest non-core assets at favorable terms. Examples of non-core asset sales include:
    • Rexam PLC’s divestiture of its Healthcare Containers and Closures business to Berry Plastics in March 2014, shifting Rexam’s focus to its consumer packaging segment
    • Illinois Tool Works’ sale of its Industrial Packaging unit in February 2014 to Carlyle Group, positioning the company to achieve its stated goal of divesting a quarter of its businesses
    • Bemis Company’s divestiture of its Paper Packaging division to Hood Packaging in February 2014, returning Bemis’ focus to its high barrier flexible and pharmaceutical packaging segments

Lightweight containerboard begins to gain greater traction in the North American containerboard market

  • Just as the European containerboard market has been driven by the need to reduce cost and has placed a greater emphasis on edge-crush testing, U.S. lightweight containerboard is gaining momentum. In addition to Atlantic Packaging’s 300,000 ton conversion of its Whitby, Ontario mill from newsprint to lightweight containerboard and Greenpac’s 540,000 ton lightweight mill in Niagara Falls, NY, the following lightweight projects are also in process:
    • SP Fiber Technologies’ conversion of its Newberg, OR mill, was accelerated in the beginning of 2014 with 130,00 tons expected to come online in Q2 2014
    • Pratt Industries’ 250,000 square-foot planned expansion at its Valparaiso, Indiana box-plant, which is expected to become fully integrated into existing operations in July 2015 and its 350,000 ton capacity Shreveport, LA mill
    • PCA’s conversion of newsprint to lightweight containerboard at its DeRidder, LA mill, is expected to come online in November 2014

Sources: Thomson Research, CapIQ, Plastics News, Analyst Reports, RISI

To read more, download the Packaging Update.

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