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PE firms target packaging companies supporting consumer, pharma in 2020

Global private equity packaging company deals continued apace in the first few months of 2021, with the six transactions recorded as of March 10 on track to become the second-highest quarterly total in the past year, S&P Global Market Intelligence data shows.

France-based, sector agnostic NCI SAS' acquisition of Sopano, a cash roll and adhesive paper supplier, was the first deal in the sector this year. Of the target companies so far acquired, one is based in Asia, one in the U.S. and the remaining four are in Europe.

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Activity in the packaging space, as in most others, got off to a slow start in 2020 but picked up pace in the six months to Dec. 31. to finish the year just one deal shy of 2019's tally of 27 deals, according to S&P Global Market Intelligence data.

Transactions mostly targeted packaging companies that support either consumer goods businesses, such as IPL Plastics Inc., which was acquired by Madison Dearborn Partners LLC, or the pharma industry, including India-based Shriji Polymers (India) Pvt. Ltd., which was backed by Malaysia's Creador.

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Over the past five years, appetite from private equity investors has remained constant, due to the industry's resilience. Packaging demand is often driven by noncyclical industries, meaning cash flow can be reliable.

Stone Canyon Industries LLC's 2016 acquisition of Atlanta-based BWAY Parent Co. Inc. from Platinum Equity LLC was the biggest transaction over the period at $2.4 billion. BWAY, which manufactures metal and rigid plastic containers, has since grown to include Industrial Container Services Inc. after acquiring the business from ICS shareholders including Centerbridge Partners LP in 2018.

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The second-largest occurred in 2019 with Warburg Pincus' acquisition of Pregis Corp. in a $1.3 billion transaction that saw the exit of Olympus Partners from the Illinois-based maker of protective and specialty packaging, according to data from S&P Global Market Intelligence.

Dan Zamlong, managing director at Warburg Pincus, noted at the time of the deal's announcement Pregis' attractive growth tailwinds, including e-commerce enablement and automation.

Rounding up the top three is the $1 billion acquisition of Florida's Anchor Glass Container Corp. by a group of investors that includes CVC Capital Partners Ltd. Seller KPS Capital Partners LP reportedly realized a 5x money-on-money multiple from its exit in the business after owning it for two and a half years.

Material-wise, in 2020, out of 26 private equity transactions in the global packaging industry, 11 deals, or 42%, targeted paper packaging companies, up from 22% the year before, according to S&P Global Market Intelligence data, which also accounted for deals for metal, glass and plastic packaging companies.

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