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ELEVATE Your Experience.
Trends in Mergers & Acquisitions in the Packaging Industry
Rick Weil, Managing Director
STRICTLY CONFIDENTIAL
Total Global M&A Deal Volume
1
Source: Bloomberg.
$3.5
$4.1
$2.5
$1.8
$2.2$2.4
$2.2
$0.6$0.5
29,983
34,756
29,550
23,646
26,91728,439
27,457
6,773 6,368
0
5,000
10,000
15,000
20,000
25,000
30,000
35,000
40,000
$0.0
$1.0
$2.0
$3.0
$4.0
$5.0
$6.0
2006 2007 2008 2009 2010 2011 2012 Q1 2012 Q1 2013
Volume ($ in trillions) # of Transactions
($ in trillions)
Private Equity Deal Activity
2
U.S PRIVATE EQUITY M&A DEAL VOLUME PRIVATE EQUITY’S SHARE OF WORLDWIDE M&A ACTIVITY
13.1%
19.1%
18.7%
24.0%22.7%
14.6%
11.6%
18.5%
22.3%
23.8%
8.9%
10.6%
12.8%13.7%
14.5%
12.8%
10.5%
12.8%
14.7%
16.4%
0%
5%
10%
15%
20%
25%
30%
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
% of Volume % of Transactions
Sources: Pitchbook, Buyouts.
($ in billions)
$353
$154
$353 $364 $345
$70 $52
2,336
1,471
2,034
2,165
1,986
500
355
0
500
1,000
1,500
2,000
2,500
$0
$100
$200
$300
$400
$500
$600
$700
$800
$900
$1,000
2008 2009 2010 2011 2012 Q12012
Q12013
Volume ($ in billions) # of Transactions
Global M&A Deal Volume – Packaging Industry
3
Sources: S&P CapitalIQ, Mesirow Financial.
$23.0
$33.9
$15.4
$20.5
$26.9$25.7
$15.6
$4.4 $4.1
496
560
467
346
396
438422
10988
0
100
200
300
400
500
600
$0.0
$5.0
$10.0
$15.0
$20.0
$25.0
$30.0
$35.0
$40.0
$45.0
$50.0
2006 2007 2008 2009 2010 2011 2012 Q1 2012 Q1 2013
Volume ($ in billions) # of Transactions
($ in billions)
Largest M&A Packaging Transactions
4
2007 2012 – YTD 2013
BUYER(S) TARGET DEAL SIZE($BN)
$3.2
$2.7
$2.1
$1.8
$1.8
$1.2
SCA Packaging Holding B.V.
Oxnard, CA Containerboard Mill
Sources: S&P CapitalIQ, Mesirow Financial.
Saint-Gobain Containers, Inc.
BUYER(S) TARGET DEAL SIZE($BN)
$2.0
$1.7
$1.2
$1.0
$0.8
$0.8
$0.7
$0.7
$0.5
CLOSEDDATE PRIVATE EQUITY FIRM TARGET COMPANY
Pending
May-13
Apr-13
Dec-12
Dec-12
Oct-12
Oct-12
Jun-12
May-12
May-12
Apr-12
Mar-12
Feb-12
Recent Private Equity Platform Investments in Packaging
5
Personal Care Business
CLOSEDDATE PRIVATE EQUITY FIRM / PORTFOLIO COMPANY TARGET COMPANY
May-13
May-13
Apr-13
Apr-13
Jan-13
Dec-12
Dec-12
Dec-12
Aug-12
Jul-12
Jul-12
May-12
Jan-12
Recent Private Equity Add-On Acquisitions in Packaging
6
Cosmetics Business
Relative Appeal of the Packaging Industry
7
Sources: S&P CapitalIQ, U.S. Census Bureau, Buyouts, Pira International, Mesirow Financial.
0%
50%
100%
150%
200%
250%
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
Packaging Industry Revenues U.S. Automotive Sales Housing Starts
CONSUMER PACKAGING GROWTH BY SECTOR
2011 - 2016
Growth in rigid plastics is primarily drive by: – Increasing popularity of single-serve
packaging for ready-to-eat foods – Substitution gains from alternative substrates
4.1%
3.8%
2.3%
2.4%
1.9%
1.6%
(0.4%)
-1.0% 0.0% 1.0% 2.0% 3.0% 4.0% 5.0%
Rigid Plastics
Flexible plastics
Glass
Paper and board
Other metal
Beverage cans
Others
Market Share Fragmentation
8
LABELS FLEXIBLE PACKAGING FOLDING CARTONS CORRUGATED
Top 3 = 10% Market Share Top 3 = 44% Market Share Top 3 = 54% Market Share Top 3 = 63% Market Share
Sources: Wall Street Research, Flexible Packaging Association, Bain Competitive Analysis Document, RISI.
U.S. Private Equity Fundraising
9
Sources: Buyouts, Pitchbook.
$28$47
$70$49
$94
$58$46
$33
$72
$166
$230
$301
$264
$66 $69
$99
$154
$292
$237
$378
$470$485
$425 $432
$0
$50
$100
$150
$200
$250
$300
$350
$400
$450
$500
1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
PE Funds Raised ($ in billions) PE Overhang ($ in billions)
($ in billions)
2,283
2,978
3,800
4,703
5,3425,637
6,0206,344
6,538
0
1,000
2,000
3,000
4,000
5,000
6,000
7,000
2004 2005 2006 2007 2008 2009 2010 2011 2012
U.S. Private Equity-Backed Companies
Private Equity Exit Flow
10
Sources: Pitchbook.
Year of Investment
2009 - 2012
2005 - 2008
2000 - 2004
U.S. INVENTORY OF PRIVATE EQUITY-BACKED COMPANIES, 2004 – 2012 U.S. EXIT ACTIVITY, 2008 – 2013
381
223
492
529
641
157
69
0
100
200
300
400
500
600
700
2008 2009 2010 2011 2012 Q1 2012 Q1 2013
# of U.S. Exits
$74.0
$18.5$15.9
$11.9$8.9 $7.8 $7.5
$4.9$1.5 $1.4 $1.2 $0.5
$0.0$5.0
$10.0$15.0$20.0$25.0$30.0$35.0$40.0$45.0
TraditionalBuyoutFunds
Real Estate Distressed /Turnaround
Energy &Power
Mezzanine Infrastructure Fund ofFunds
GeographicFocus
Debut Funds Technology Expansion /Growth
FinancialServices
11
2012 FUNDS RAISED BY FUND TYPE
LBO FUNDS RAISED BY TARGET SIZE, 2007 – 2012
Private Equity Fundraising Activity
Source: Buyouts.
($ in billions)
($ in billions)
$159
$129
$16 $9 $13$54
$102 $103
$32 $39$57 $66
$26 $25 $14 $16$21 $23$8 $6 $2 $3 $5 $6
$0
$30
$60
$90
$120
$150
$180
2007 2008 2009 2010 2011 2012
Mega Funds (> $5BN) Large-Medium Funds ($1BN to $4.99BN) Mid-Market Funds ($300MM to $999MM) Small Cap Funds (< $300MM)
$70.0 $75.0 $80.0
ANNOUNCEDDATE ACQUIRER TARGET COMPANY COMMENTARY
Jan-13 Film expansion into China
Apr-12 Tobacco packaging expansion into Mexico
Mar-12 Flexible packaging expansion into India
Mar-12 Flexible packaging expansion into Southeast Asia
Jan-13 Global label expansion
Mar-13 Complementary pharmaceutical and healthcare focus
Nov-12 Folding carton expansion into Europe
Nov-12
Sep-12 Corrugated expansion into Turkey
Oct-12 Corrugated expansion into India
Jun-12 Film metallizing expansion into U.S.
Jun-12 Corrugated expansion into U.S.
Jul-12 Tissue production expansion into U.S.
Paperboard and plastics expansion into Europe
Recent Strategic International Transactions
12
Two Packaging Film Facilities
Aluprint S.A. de C.V. Tobacco Packaging Facility in Monterey, MEX
Packaging Pvt. Ltd.
Metallized Plastic Division
Healthcare Packaging Group
Recent Tactical Transactions by Strategic Acquirers
13
Office and Consumer Products and Designed and Engineered Solutions
Schwarz Supply Source, Inc. Morton Grove, IL Facility
Tobacco Packaging and Specialty Folding Carton Operations
7.2x7.4x
6.6x
5.3x
6.2x6.5x
6.8x
7.5x
8.7x
7.2x
6.5x6.8x
7.2x 7.2x
0.0x
1.0x
2.0x
3.0x
4.0x
5.0x
6.0x
7.0x
8.0x
9.0x
10.0x
2006 2007 2008 2009 2010 2011 2012
Financial Strategic
Packaging M&A Transactions: Average EBITDA Multiples
14
Sources: S&P CapitalIQ, Mesirow Financial.
High-Yield Issuance
15
Source: Wall Street Research.
$151$163
$117
$179$165
$65
$191
$313
$270
$386
$0
$50
$100
$150
$200
$250
$300
$350
$400
$450
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
($ in billions)
16
BUSINESS DEVELOPMENT COMPANY CAPITAL RAISED, 2000 – 2012
ANNUAL DIVIDEND RECAPITALIZATION LOAN VOLUMES, 2004 – 2012
Business Development Company and Dividend Recapitalization Activity
Sources: Buyouts, S&P CapitalIQ Leveraged Commentary & Data.
$0
$10
$20
$30
$40
$50
$60
2004 2005 2006 2007 2008 2009 2010 2011 2012Dividend Recap Volumes ($ in billions)
($ in millions)
($ in billions)
$714 $765$216
$1,160
$2,544$2,070 $1,942
$4,812
$1,581
$823
$2,032$1,299
$4,068
$0
$1,000
$2,000
$3,000
$4,000
$5,000
$6,000
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012BDC Capital ($ in millions)
17
Boca Raton-base private equity firm Sun Capital Partners recently announced plans to merge five of its plastic packaging portfolio companies to form the sixth-largest plastic packaging company in the world
The new company, which will be called Exopack Holdings Sarl, will be created by merging Sun Capital’s Exopack, Kobusch, Britton, Paragon and Paccor businesses
The deal will combine packaging businesses with operations in Europe and the Middle East with Exopack, which was previously focused on North America, and will create a company with 63 plants and 8,650 employees
The combined revenue of all the companies was approximately $2.5 billion in 2012 – $65 million in anticipated synergy savings expected
Exopack Holdings Sarl will be based in Luxembourg
Sun Capital Partners’ Combination of Flexible Packaging Portfolio Companies
18
STEADY EXPANSION VIA MERGERS & ACQUISITIONS
STOCK PERFORMANCE, IPO (OCTOBER 2012) TO TODAY
Spotlight on Berry Plastics
Sources: Buyouts, S&P CapitalIQ Leveraged Commentary & Data.
($ in millions)
80%
90%
100%
110%
120%
130%
140%
150%
Oct-12 Nov-12 Dec-12 Jan-13 Feb-13 Mar-13 Apr-13 May-13
Berry Plastics S&P 500 Index
+40%
+14%
$80 $111 $114 $119 $161$213
$275
$419 $454 $496$559
$686$754
$408 $462 $494 $552$814
$1,170$1,432
$3,114$3,615
$3,202
$4,418 $4,657 $4,701
$0
$1,000
$2,000
$3,000
$4,000
$5,000
$0
$200
$400
$600
$800
$1,000
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012EBITDA Revenues
Post-Apollo / Graham Acquisition
Recent Case Study
Oliver Products Company (“Oliver”) is a leading producer of sterile-grade medical device packaging and pharmaceutical packaging focused on specialty and high-margin product lines and markets and sells its products to every major, globally-recognized medical device company. Additionally, the company’s food packaging and equipment segment is the largest supplier of complete food packaging solutions for Meals on Wheels in the United States.
Mesirow Financial was engaged to act as Oliver’s financial advisor in the sale of the company.
Mesirow Financial developed a detailed and attractive investment thesis for Oliver, which highlighted the company’s scarcity value, brand equity, customer loyalty and best-in-class margin profile, as well as the high barriers to entry in the industry.
Oliver sold for a very strong multiple.
The transaction closed in April 2012.
BUSINESS DESCRIPTION
KEY PROCESS TAKEAWAYS
Sale of Oliver Products Company to Berwind Corporation
a portfolio company of
has been acquired by
19
Mesirow Financial refers to Mesirow Financial Holdings, Inc. and its divisions, subsidiaries and affiliates. The Mesirow Financial name and logo are registered service marks of Mesirow Financial Holdings, Inc., © 2012, Mesirow Financial Holdings, Inc. All rights reserved. Some information contained herein has been obtained from sources believed to be reliable, but is not necessarily complete and its accuracy cannot be guaranteed. Certain symbols and logos used herein are registered trademarks of the applicable Companies. Any opinions expressed are subject to change without notice. Any performance information shown represents historical market information only and does not infer or represent any past performance of any Mesirow Financial affiliate. It should not be assumed that any historical market performance information discussed herein will equal such future performance. It should be assumed that client returns will be reduced by commissions or any other such fees and other expenses that may be incurred in the management of the account. Fees Performance information provided also contemplates reinvestment of dividends. Advisory Fees are described in Mesirow Financial Investment Management Inc.’s Part II of the Form ADV. Mesirow Financial does not provide legal or tax advice. Advisory services offered through Mesirow Financial Investment Management, Inc. an SEC-registered investment advisor, Securities offered by Mesirow Financial, Inc. member NYSE and SIPC.
HEADQUARTERS 353 North Clark Street Chicago, Illinois 60654 Main Phone: +1 312.595.6000 Main Fax: +1 312.595.4246
NEW YORK OFFICE 666 Third Avenue
New York, NY 10017 Main Phone: +1 212.351.8108
Main Fax: +1 212.351.8148
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