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TKO Miller Market Analysis 

  • Flexible packaging multiples have increased 20% since 2015 (see valuation index below) as strategic and financial sponsors continue to place premiums on platform and add-on acquisitions with stable cash flows, non-cyclical end markets, and attractive margin profiles.
  • Packaging continues to remain attractive to private equity investors because it is seen as lower risk and less cyclical than other sectors. PE investors, who often rely on heavy amounts of leverage, like that flexible packaging is driven by counter-cyclical industries such as healthcare, food, or personal care.
  • M&A is being used to create operational efficiencies and growth, which in turn allows acquirors to better compete with larger entities and respond to rapidly changing consumer demands.
  • The industry continues to see steady consolidation with preliminary results showing 28 transactions in 2019, just below 2018’s record 33 transactions. 
  • Flexible packaging used for food sold in retail outlets and to institutions makes up 50% of the $31.8 billion market. This segment has seen growth due to innovative technology and the ability to adapt to consumer preferences.

Recent Flexible Packaging Transactions 

Oct. 2019 – Winpak Acquires Control Group

Winpak has agreed to acquire Cheringal Associates, Inc. and Norwood Printing, Inc., (collectively “Control Group”) for $42 million (Pitchbook). Control Group delivers specialized printed packaging solutions to the pharmaceutical, healthcare, nutraceutical, cosmetic, and personal care markets. Olivier Muggli, Winpak’s President and CEO, commented “The newly formed Winpak Control Group will be able to uniquely capitalize upon each others complimentary technological depths, broad product portfolio, relentless quest for the highest service level and establish a new standard for the healthcare market.”

Oct. 2019 – PPC Flexible Packaging Acquires Popular Ink LLC

PPC Flexible Packaging acquired Popular Ink, LLC, a provider of short-run, high-service specialty packaging for health and beauty and nutraceutical markets. Key products include printed laminated roll stock, gel and stick packs, stand-up pouches, labels, and sleeves. Popular Ink is the fifth acquisition of specialty and differentiated flexible packaging firms by PPC. Previous acquisitions include Fisher Container and Packaging Products Corporation in 2017, Temkin International in 2018, and HFM Packaging (represented by TKO Miller) in 2019.

Oct. 2019 – Arsenal Capital Partners Acquires Clariant’s Healthcare Packaging Business

Arsenal Capital Partners has completed the acquisition of Clariant’s healthcare packaging business for roughly $315 million at a 13.2x EV/EBITDA multiple. The division is a global leader in products used to protect pharmaceutical, nutraceutical, and diagnostic products from moisture and oxygen.

Dec. 2019 – Green Arrow Capital Management Enters Exclusive Talks to Acquire Poplast Flexible Packaging

In a deal reportedly worth €110 million (Pitchbook), Green Arrow Capital Management has agreed to acquire Poplast Flexible Packaging, a manufacturer of flexible packaging products for the food and pharmaceuticals sectors based in Castel San Giovanni, Italy. The Company reportedly generated  revenues of €52.3 million and EBITDA of €7.4 million in 2018.

Valuation Indices 

Source: TKO Miller's proprietary Flexible Packaging valuation index & S&P CapIQ

Middle Market Valuation Multiples

Source: GF Data

Flexible Packaging News 

Top 10 Food Packaging Developments of 2019

Packaging Digest details 2019’s top packaging innovations and developments that include meal kit packaging, inverted pouches, and resealable packaging for liquids. [LINK]

Industry Challenges

Labor and talent are the top concerns for converters, followed by strength of the supply chain and growth. These issues could be amplified for smaller converters as large multi-national players continue to pursue small to mid-sized acquisitions in the space, impacting their customers and supply chains. [Flexible Packaging Association]  

Three Companies Unite to Showcase Plastics Traceability Solution

The collaborative project for circularity in plastics founded by polyamide supplier DOMO, materials manufacturer Covestro, and supply chain transparency start-up Circularise, has reached its first milestone. [LINK]

Trends in the Marketplace

Persisting trends in the market include expectations for greater demand for convenience, ease-of-use (opening and resealing), consumer friendly packaging, enhanced packaging graphics, and an increased emphasis on consumer value as converters utilize technical improvements. [Flexible Packaging Association

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

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