global packaging m&a - fastmarkets risi...joined moorgate capital from credit suisse investment...
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Global Packaging M&ANicholas Mockett Moorgate Capital
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Introduction to Moorgate Capital
Moorgate Capital is an independent Corporate Finance firm specialising in:
Buy Outs
Mergers, Acquisitions & Disposals
Capital Raising
Strategic Advice
Fairness Opinion
Clients include multinational public companies, leading financial .sponsors, management teams, private companies, family offices and banks.
Clients benefit from:
Our investment in long term relations
Lack of conflict of interests
Deep sector knowledge
Key contactsSir Peter Heap [email protected] Tel: +44 20 7060 7017
Sir Peter was with the Foreign & Commonwealth Office of the British Government for over thirty years, including being the Ambassador inBrazil, Senior Trade Commissioner in Hong Kong, British High Commissioner, Bahamas, as well as the Head of EnergyDepartment. Subsequently he worked full time with HSBC Investment Bank and as senior adviser or Non Executive of a number of othercompanies including Amerada Hess and BOC Group. Sir Peter is Chairman Emeritus of the Brazilian Chamber of Commerce in GreatBritain.
Nicholas Mockett Industry [email protected] Tel: +44 20 7060 7005
Nick has focused exclusively on the Paper & Packaging related industries for 25 years and his experience includes disposals, acquisitions,leveraged buy outs and take privates. He has advised on dozens of deals worth billions of Dollars. Prior to Moorgate Capital he spent 4years with Europa Partners and 8 years with PwC Corporate Finance where he was Sector Leader for the P&P industry. Nick is a Liverymanof the Worshipful Company of Stationers & News Paper Makers; Judge of the annual Packaging News Award; and serial Judge of Pulp &Paper Industry Awards.
Sophie Spillard Senior Vice [email protected] Tel: +44 20 7060 7003
Sophie has 10 years of M&A experience including 20+ M&A transactions in Paper & Packaging, advising MNCs and financial sponsors. Shejoined Moorgate Capital from Credit Suisse Investment Bank, where she focused on UK M&A coverage and Corporate Brooking. Sophie isa graduate of Imperial College London (MSci in Geophysics), Tanaka Business School, and holds an MBA from IMD in Switzerland. She waslead author of Global Packaging 100, published by Haymarket in conjunction with Packaging News.
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Outline
1. Industry structure & performance
2. Global packaging M&A
3. Trends & outlook
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Outline
1. Industry structure & performance
2. Global packaging M&A
3. Trends & outlook
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Drivers of consolidation
STRUCTURE
CONDUCT PERFORMANCE
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Industry concentration: HHI
SC P
415
265
1,675
1,049
602
552
1,414
791
2,827
1,729
1,482
1,179
296
351
1,671
1,602
1,025
817
640
488
1,393
1,893
1,401
1,073
0 500 1000 1500 2000 2500 3000
Asia
Asia
North America
North America
Western Europe
Western Europe
Asia
Asia
North America
North America
Western Europe
Western Europe
Asia
Asia
North America
North America
Western Europe
Western Europe
Asia
Asia
North America
North America
Western Europe
Western Europe
Containerboard
Competitive Moderately concentrated Highly concentrated20042016
Coated woodfree
Uncoated woodfree
Tissue
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Deal drivers: Porter's five forces
SC P
Rivalry among existing
competitors Bargaining power of buyers
Bargaining power of suppliers
Threat of new entrants
Threat of substitute products
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Deal drivers
SC P
Producers
MaturingMarkets
Demand Side:> Consolidation> Globalisation
Commodityv.
Differentiation
Supply Side:> Consolidation> Volatility
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Market sentiment
SC P
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Share price performance
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“Brazil Is The Best Stock Market In The World Right Now” Jan 2019Forbes
SC P
Sept 18 Oct 18 Nov 18 Dec 18 Jan 19 Feb 19 Mar 19 Apr 19 May 19 Jun 19 Jul 19 Aug 19Aug 18
-20%
-10%
0%
10%
20%
30%
40% IBOVESPA+37.4%
S&P 500+2.2%FTSE 100-4.8%
Share price performance v. other industries
SC P
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CONTAINERS & PACKAGING+ 141.32 %
FTSE 100+ 37.45 %
PHARMA+ 141.70 %
CONSTRUCTION+ 107.56 %
CHEMICALS+ 124.92 %
FOOD & BEVERAGE+ 102.75 %
OIL & GAS+ 0.96%
AUTOMOBILE+ 92.59%
AGRI- 15.60 %
MINING- 64.92 %
Share price performance v. other industries
SC P
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CONTAINERS & PACKAGING+ 141.32 %
FTSE 100+ 37.45 %
PHARMA+ 141.70 %
CONSTRUCTION+ 107.56 %
CHEMICALS+ 124.92 %
FOOD & BEVERAGE+ 102.75 %
OIL & GAS+ 0.96%
AUTOMOBILE+ 92.59%
AGRI- 15.60 %
MINING- 64.92 %
TECHNOLOGY+ 275.33 %
INTERNET+ 388.44 %
EV/EBITDA valuations: paper & board packaging
SC P
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8.4 x 8.4 x
9.2 x9.6 x
9.2 x 9.4 x 9.3 x
8.4 x
6.2 x6.7 x
0 x
1 x
2 x
3 x
4 x
5 x
6 x
7 x
8 x
9 x
10 x
Q4 2016 Q1 2017 Q2 2017 Q3 2017 Q4 2017 Q1 2018 Q2 2018 Q3 2018 Q4 2018 Q1 2019
Average 8.48 x
EV/EBITDA valuations vs. other substrates
SC P
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Plastic pkg 11.44 x Diversified pkg 10.45 x
Metal & glass pkg 9.51 xPaper & board pkg 8.48 x
0 x
2 x
4 x
6 x
8 x
10 x
12 x
14 x
Q4 2016 Q1 2017 Q2 2017 Q3 2017 Q4 2017 Q1 2018 Q2 2018 Q3 2018 Q4 2018 Q1 2019
“ and to join forces to pioneer paper bottles”April 2019
“New $4.3B Canadian project to include PE” July 2019
“Material Insights: cancels its West Virginia expansion” July 2019
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Plastics News
PackagingNews
Plastics News
Plastics industry headlines
Outline
1. Industry structure & performance
2. Global packaging M&A
3. Trends & outlook
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Global packaging M&A: number of transactions
0
50
100
150
200
250
300
350
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
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Global packaging M&A: value of transactions
$ 0 bn
$ 10 bn
$ 20 bn
$ 30 bn
$ 40 bn
$ 50 bn
$ 60 bn
$ 70 bn
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
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“Brazil's pulpmaker says acquisition to be concluded on Jan 14 ~ US$9.2bn” Nov 2018
Investments
“ subsidiary Softys acquires ” Aug 2019
“ has a 49.4 percent stake in and is in arbitration to complete the full acquisition of the company.” Feb 2019
“ to invest $2.7bn in Uruguay pulp mill” Jul 2019
Packaging M&A deal volume
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Buyer type Seller type
Strategic 65%PE platform 18%PE add on 17%
Paper 39%Rigid Plastic 24%Flexible Plastic 19%Other (glass, can) 18%
65%
18%
17%
39%
18%
19%
24%
Packaging M&A deal valuations
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8.1 x
6.9 x
5.9 x6.5 x
6.9 x 7.0 x 6.8 x7.4 x
7.7 x8.0 x 8.1 x
8.4 x
0.0 x
1.0 x
2.0 x
3.0 x
4.0 x
5.0 x
6.0 x
7.0 x
8.0 x
9.0 x
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
Outline
1. Industry structure & performance
2. Global packaging M&A
3. Trends & outlook
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Amazon and growth of e-commerce
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WSJ
War on plastics
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The Times
Iceland: plastic free by 2030
#TooCoolForPlastic
850 Tonnes of plastic saved so far26
Telegraph
Burberry: plastic free by 2025
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wwd.com
Robust fundamentals
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1. 6.
2. 7.
3. 8.
4. 9.
5. 10.
Environmental influence
Urbanisation
Convenience & on the go
Smaller pack sizes
Branding
Health conscious
Internet retailingWorking mothers
Single people households
LOCAL Shopping locally
MICRO TRENDSMACRO TRENDS1.
Growing population & middle class
2.
Ageing population
3.
Growing protein demand
$
Private Equity dry powder
$ 0 bn
$ 250 bn
$ 500 bn
$ 750 bn
$ 1,000 bn
$ 1,250 bn
$ 1,500 bn
$ 1,750 bn
$ 2,000 bn
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
~ $ 1.8 trillion
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~ $ 1.8 trillion
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fool.com
Private Equity dry powder
U. A. E.
NORWAY SINGAPORE
SWITZERLAND
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CURRENC¥ WAR$ and interest rates
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ft.com
Changes in merger legislation
Canada Increases Threshold of "Size-of-Target" Test
China Reforms Merger Control Regime
Colombia Increases Threshold for Merger Control Filings
Germany and Austria's Competition Agencies Publish Guidance on Merger Control Thresholds
Swedish Competition Authority Authorized to Reject Transactions in Merger Control Cases
Lithuania Increases Merger Notification Thresholds
Philippines Adjusts Notifications ThresholdsUkraine Adopts
Law Linking Merger Reviews to Sanctions List
United Kingdom Lowers Jurisdictional Thresholds for Mergers in Select Sectors
United States Adjusts HSR Thresholds
Italy Makes Annual Adjustment to Turnover Thresholds
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Outlook
Macro and micro indicators remain robust
Valuations and stock market performance strong
Continued M&A
Activity from both strategic and financial acquirors
Strong industry dynamics
? Changes in interest rates and cost of capital
? New legislation inhibiting deals
? Recession34
Moorgate Capital
www.moorgate-capital.com
33 St James's Square
London
SW1Y 4JS
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Moorgate Capital
Disclaimer
This presentation was prepared by Moorgate Capital Ltd. (“Moorgate Capital”). This presentation is incomplete without reference to, and should be viewedsolely in conjunction with, the oral briefing provided by Moorgate Capital. The presentation (including the briefing) is proprietary to Moorgate Capital andmay not be disclosed to any third party or used for any other purpose without the prior written consent of Moorgate Capital.
The information in this presentation reflects prevailing conditions and our views as of this date, which are accordingly subject to change. In preparing thispresentation, we have relied upon and assumed, without independent verification, the accuracy and completeness of all information available from publicsources or which was otherwise reviewed by us. In addition, our analyses are not and do not purport to be appraisals of assets, stocks or businesses. Evenwhen this presentation contains a kind of appraisal, it should be considered preliminary, suitable only for the purpose described herein and not be disclosedor otherwise used without the prior written consent of Moorgate Capital.
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