TKO Miller Market Analysis
- Valuations within the flexible packaging market continue to climb as strategic and financial buyers search for new markets, synergies, and enhanced equipment and capabilities.
- TKO Miller’s proprietary Flexible Packaging valuation index (see below) saw a 10 percent increase in Q2, signaling rising valuations for publicly traded companies in this sector.
- The use of flexible packaging is expected to grow in every category of the food segment besides tobacco due to the increased consumption of processed foods and beverages, new product innovations, and environmental advantages.
- Sustainability through the use of recyclable and compostable materials continues to be a key industry theme with many brand owners and retailers pledging to reduce the use of virgin plastics in their packaging – often as much as 50 percent. However, current recycled plastic content levels are less than 10 percent for the most common plastics. U.S. recycling rates cannot meet the demand, with current plastic recycling rates at an estimated 14 percent [Flexible Packaging Association Publication; Recycling Today].
- Despite supply constraints, flexible packaging remains the fastest growing segment of packaging in the U.S., growing from $23.2B to $31.8B from 2009-2018.
Recent Flexible Packaging Transactions
March 2019 – C-P Flexible Packaging, Inc. Acquires Flexo Transparent, LLC
C-P Flexible Packaging, a portfolio company of First Atlantic Capital and a leading manufacturer of flexible packaging products including pouches, re-sealable packages, and shrink sleeves, will acquire Flexo Transparent from ORIX Mezzanine and Private Equity and Sidereal Capital Group. Flexo Transparent, based in Buffalo, NY, provides its consumer retail customers with custom packaging manufacturing and printing solutions including roll-stock, pouches and stretch sleeves, and cold seal technology.
April 2019 – Next Generation Films and Charter NEX Films Agree to Merger
Leading specialty film producers Next Generation Films and Charter NEX Films jointly announced their plans to combine, creating a new platform focused on leading the specialty films market. The combination is expected to provide both companies and their customers with significant benefits including access to new markets, enhanced technical expertise, and an expanded manufacturing footprint. The combined company will have 11 manufacturing plants and more than 100 extrusion lines in Ohio, Wisconsin, South Carolina, and Massachusetts.
April 2019 – Tekni-Plex Signs Definitive Purchase Agreement to Acquire Three Amcor Manufacturing Facilities
Tekni-Plex has signed a definitive purchase agreement to acquire three manufacturing facilities from Amcor's Flexible Packaging business unit. The facilities, located in Madison and Milwaukee, Wisconsin and Ashland, Massachusetts, provide a broad portfolio of sterilizable medical device packaging substrates including coated and uncoated Tyvek®, heat-seal and cold-seal coated paper and films, medical grade laminates, die-cut lids, and labels. The Amcor manufacturing facilities purchase is the eleventh acquisition Tekni-Plex has made in the past five years, supporting its strategy to grow its business though transformative acquisitions and strategic add-ons.
July 2019 – Berry Global, Inc. Completes Acquisition of RPC Group Plc
The purchase price includes approximately $4.3 billion in cash paid for the equity interest in RPC and $2.2 billion of debt and estimated transaction costs, bringing the total consideration to $6.5 billion. The combination of Berry and RPC creates a leading global supplier of valued-added protective solutions and one of the world’s largest plastic packaging companies. Berry’s combined global footprint will consist of over 290 locations worldwide, including locations in North and South America, Europe, Asia, Africa, and Australia. The pro forma combined business will employ over 48,000 people with sales of approximately $13 billion.
Flexible Packaging Valuation Index
Source: TKO Miller's proprietary Flexible Packaging valuation index
Middle Market Valuation Multiples
Source: GF Data
Flexible Packaging News
Trends Driving Popularity of Flexible Packaging
Businesses are rapidly turning to flexible packaging due to lower manufacturing costs, enhanced supply chain effectiveness, extended shelf life, light-weight, augmented sales, and greater consumer appeal. Consumers, retailers, and brands are now demanding product manufacturers to change the way goods are packaged. According to the Flexible Packaging Association, 83 percent of all brands are presently using flexible packaging of some kind. [LINK]
First-Half Roundup: Packaging Deals Among the Largest So Far in 2019
Packaging deals marked the hottest first-half mergers and acquisitions action, led by the already giant Berry Global Group Inc. buying RPC Group plc to become a true global packaging manufacturer. [LINK]
Flex Pack Magazines Top 25 Ranking Released
Of the top 25 converters, 16 reported M&A transactions in the last 18 months, further confirming that the M&A market for Flexible Packaging remains highly robust. [LINK]
About TKO Miller
TKO Miller, LLC is an independent, advisory-focused, middle market investment bank. With over 130 years of collective transaction experience, TKO Miller provides merger and acquisition and financial advisory services for privately-held and private-equity owned businesses, with a special focus on family-and-founder-held businesses.
Flexible Packaging is one of TKO Miller’s core industry focuses, along with Consumer Products, Industrial Services, Manufacturing, Business Services, and Health Care. After advising numerous flexible packaging and printing companies on M&A and financing transactions, TKO Miller’s professionals have developed deep industry knowledge and a broad contact network that accompanies their transaction expertise with privately-held companies.
TKO Miller aims to bring value to clients by combining outstanding people with a results-oriented, flexible approach to transactions. Our services include company sales, recapitalizations, asset divestitures, and management buyouts. TKO Miller has a generalist focus and has served clients in a wide range of industries, including manufacturing, business services, consumer products, and industrial products and services. For more information, visit our website www.tkomiller.com