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Plastics M&A Pulse – 2018 Year in Review

  • March 20, 2019
  • Industry Updates
  • Plastics, Plastics & Packaging
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M&A activity in the plastics and packaging industries continued to be strong in 2018 with total deal volume of 327 transactions, representing yet another year exceeding 300 transactions on a global basis. Compared to a very strong 2017 (which represented a 5-year peak in plastics and packaging M&A activity), transactions in 2018 declined 32 deals or -9%. This decline was primarily attributable to lower activity in Q1 2018 which had 24 fewer transactions compared to the same time period in 2017. Despite the slight pullback in 2018, PMCF’s proprietary industry research showed a healthy mix of both strategic buyer and private equity activity and a number of marquee transactions.

Historically, plastics and packaging M&A activity has been more heavily weighted towards strategic buyers, which represented ~63% of total transactions over the last 5 years. However in 2018, PMCF noted a dramatic shift towards private equity which reduced strategic buyers’ share of total plastics and packaging transactions to 54%, the lowest level since PMCF began tracking data in the sector (10+ years). This shift was primarily a result of a modest increase the total number of private equity transactions (3.5%) coupled with a signifi cant decline in strategic buyer transactions (-17.3%). In reviewing all of the sector data and in its regular course of business executing M&A transactions in the plastics and packaging industries, PMCF did not notice fewer strategic buyers or a pullback in interest level. PMCF did note growth in the number of private equity platforms and continued interest in the plastics and packaging industries by private equity.

Based on current data and trends, M&A activity in the plastics and packaging industries is expected to remain strong in 2019. Transaction multiples across many of the industry sectors don’t appear to show any signs of retreating from elevated/peak levels which should continue to prompt “sellers” to explore company sales. PMCF continues to see a supply/demand imbalance between buyers and sellers, particularly with the increased private equity interest and investment. This imbalance coupled with strong credit markets and a large amount of buyer capital overall should help these seller favorable conditions to continue. The question is how long will this prolonged M&A market run for sellers last. Many thought it would subside by now and there are certainly some signs of potential future challenges including stock volatility, global trade, and political uncertainty. Right now and at least for the short term, the positives seem to outweigh the negatives.

PMCF-Pulse-Plastics-2018-Year-in-Review

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