Coating - Aimcal

Executive Summaries • A Look Ahead
Global consolidation
In today’s mergers and acquisitions market, companies
within the metallizing, coating and laminating industries
face a critical decision. They can choose to embrace the
current industry trends or ignore them. For companies
who want to survive, the choice is clear: They must
actively prepare for consolidation with the proper strategy.
Since 2001, Blaige & Co. has tracked and analyzed every
disclosed M&A transaction within the packaging industry.
Based on this data, the company recently completed a
10-year report that found that, on average, more than
50 percent of 2001’s Top 50 packaging converters have
either merged or sold over the past decade.
During this time period, industry “leaders” have emerged
as the top 10-20 percent of packaging companies
who have maintained their leadership status through
aggressive M&A strategies, which include the best
acquisitions and selective divestitures. Another 10-20
percent of the industry is made up of consolidatees or
“followers” who are rapidly losing market share and
are required to go through restructuring and/or make
divestitures. The majority of the industry, the primarily
small to mid-sized processors, are gradually losing market
share to their stronger competitors and must consider
their options to survive and thrive in this fragmented but
consolidating industry.
An example of this pattern is evident in the flexiblepackaging
industry where there were numerous
competitors back in the 1980s. By 2011, 34 percent
market share was held by only four “leaders”— Amcor,
Bemis, Printpack and Sealed Air. Still, compared to what
has happened M&A-wise in other packaging segments
such as glass bottles, metal cans and beverage cans, the
global flex-pack field appears due for significant, further
consolidation in 2012 and beyond.
The label industry is no stranger to this M&A trend as
well. Our research shows an average of 40 deals each
year since 2003, and like flexible packaging, one-third
of the Top 50 label converters back in 2001 have been
eliminated via consolidation over the past decade.
94 | 2012 AIMCAL SourceBook
Despite the global financial crisis, M&A volume within
the packaging industry has continued to increase. Thus,
it appears that the forces of global consolidation have a
greater influence than economic cycles. The implications
of this conclusion are unique for buyers and sellers of
packaging converters. Potential sellers and managers
should be cautious in applying typical industrial “buy-andsell”
decisions and thought patterns to packaging M&A.
Data already indicate that the “sophisticated” sellers
(corporate and financial/institutional sellers) have been
on top of the current wave of favorable sell-side market
conditions. Private and entrepreneurial owners often wait
too long to respond to market developments and sell on
the back-end of the cycle or miss the wave entirely. For
2012, however, there are indications that many private
sellers are now beginning to explore market opportunities.
Additionally, capital availability has shown a 10-fold
increase, pushing valuation multiples back to nearrecord
levels, and the amount of un-invested privateequity
capital has grown to nearly 10-fold over the past
decade to a staggering $480 billion. These factors will
continue to drive the deal market in 2012 and 2013, and
consolidations in the metallizing, coating and laminating
field will accelerate, creating both risk and opportunity.
It’s a seller’s market, but CEOs must develop and
effectively execute consolidation plans to properly
survive and thrive. They must “Lead, Follow…or Get
Out of the Way.” Whether you are considering a merger,
sale or equity financing for an acquisition, you will bring
significant negotiating and value-enhancing power to your
side by partnering with an industry dedicated advisor. n
By thomas e. Blaige, ceo/managing director,
Blaige & co., 312-337-5200, email: tblaige@blaige.com,
www.blaige.com