paper, plastics, and packaging - moss adams · 7 paper, plastics, and packaging m&a...

1 PAPER, PLASTICS, AND

PACKAGING

M A R K E T M O N I T O R

S U M M E R 2 0 1 5

Paper, Plastics, and Packaging


PACKAGING

Contents

INDUSTRY & MACROECONOMIC UPDATE 3

PUBLIC SHARE PRICE PERFORMANCE & VALUATIONS 4

M&A ACTIVITY & VALUATIONS 6

MOSS ADAMS OVERVIEW 11


PACKAGING

689636

467530

583 596

477 495

122 120

$49.1

$17.5 $24.7 $26.7 $27.4 $22.5

$13.4

$20.4

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Growing Economy and Strong Valuations are Positive for Packaging Industry

U.S. gross domestic product (“GDP”) contracted at a 0.7% seasonally adjusted annual rate in Q1 2015

─ The U.S. trade deficit was among the largest components weighing on Q1 2015 GDP as (1) the strong dollar caused U.S. exports to reach lows not seen since Q1 2009 and (2) the labor disputes at West coast ports significantly slowed down shipping

─ Consumers pulled back on spending in the first quarter as person consumption expenditures increased at a mere 1.8% rate

─ Corporate profits in Q1 2015 increased 3.1% from Q4 2014 and 9.2% from Q1 2014

Economists are generally not concerned by the Q1 2015 contraction and anticipate the economy to grow 1.5% - 3.0% in Q2 2015

Global packaging deal volume in Q1 2015 is in-line with the same period one year ago while deal values increased significantly primarily due to several multi-billion dollar transactions that closed in the first quarter:

─ Wendel / Constantia Flexibles – $1.7 billion

─ Crown Holdings / Empaque – $1.3 billion

─ Verso / Newpage – $1.4 billion

Packaging M&A activity is well-positioned on the heels of additional multi-billion dollar transactions set to close in 2015

─ Rock-Tenn / MeadWestvaco

─ Ball Corporation / Rexam

U.S. GDP Growth

Global Packaging M&A Deal Volume and Value (1)

1) Revised from prior market monitors to include only closed, change of control M&A transactions and transactions with undisclosed values.

Sources: S&P CapitalIQ, U.S. Bureau of Labor Statistics.


PACKAGING

Strong, Robust Equity Market and Share Price Performance in Recent Years

Three-Year Indexed Share Price Performance

Note: The indices in the chart above are composed of the publicly-traded companies listed on page 6.

Source: S&P CapitalIQ.

S&P 500

+65%

Rigid Index+53%

Paper Index+100%

0.0%

10.0%

20.0%

30.0%

40.0%

50.0%

60.0%

70.0%

80.0%

90.0%

100.0%

110.0%

120.0%

130.0%

Jun

-12

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12

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-13

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-13

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-14

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-15

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Plastic Index+99%


PACKAGING

Paper Index8.4x

Plastic Index12.4x

S&P 50010.7x

0.0x

2.0x

4.0x

6.0x

8.0x

10.0x

12.0x

14.0x

16.0x

Jan

-07

Jun

-07

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v-0

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Ap

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EV

/ T

TM

EB

ITD

A

Rigid Index9.7x

Packaging Universe EBITDA Multiples Converge with the Broader Market

Source: S&P CapitalIQ.

The sales growth outlook for packaging companies is expected to grow at a modest rate of 3% or less with the Rigid Packaging universe expected to show no sales growth in the next 12 months

Meaningful EBITDA growth is anticipated over the next 12 months for the Plastic Packaging industry while Paper and Rigid Packaging are expected to lag the overall market

Public Company Packaging Valuations Next 12 Months: Estimated Growth

Estimated NTM Sales Growth Estimated NTM EBITDA Growth

EBITDA multiples for packaging companies traded in-line with the overall market pre-2010 and began to significantly lag the overall market from 2010 to mid-2014

However, packaging multiples have begun to converge with the overall market over the last twelve months with the plastic peer group outperforming the S&P 500

4.8%

0.0%

3.0%

0.8%

-2% 0% 2% 4% 6%

S&P 500

Rigid Packaging

Plastic Packaging

Paper Packaging

Est. NTM Sales Growth

10.6%

0.6%

15.1%

6.5%

0% 10% 20%

S&P 500

Rigid Packaging

Plastic Packaging

Paper Packaging

Est. NTM EBITDA Growth


PACKAGING

($ in millions, except where noted)

Robust Packaging Valuations Continue; Shares Trading Near 52-Week Highs

Note: Not meaningful (NM) if EV/Sales is greater than 5.0x, or EV/EBITDA is greater than 30.0x. NA if denominator is 0, for percentages and multiples, or if estimates are not available. NTM figures are based on the median estimate of Wall St. analysts.

Source: S&P CapitalIQ, company filings and Moss Adams Capital research.

TTM Data NTM Estimated Growth EV Multiple

Company Name

Share

Price 52wk High / Low

Market

Cap

Enterprise

Value Revenue EBITDA

EBITDA

Margin Revenue EBITDA

TTM

Revenue

TTM

EBITDA

NTM

Revenue

NTM

EBITDA

Paper Packaging

International Paper Company $51.83 $57.90 / $44.50 $22,236 $31,982 $23,410 $3,771 16.1% (0.3%) 11.8% 1.37x 8.5x 1.37x 7.6x

MeadWestvaco Corporation 50.54 55.15 / 37.28 8,639 11,526 5,591 923 16.5% (2.1%) 8.4% 2.06x 12.5x 2.11x 11.5x

Rock-Tenn Company 65.14 71.47 / 43.32 9,393 12,117 10,109 1,590 15.7% 1.0% 1.4% 1.20x 7.6x 1.19x 7.5x

Packaging Corporation of America 69.18 84.88 / 57.06 6,724 8,975 5,847 1,072 18.3% 2.6% 6.5% 1.54x 8.4x 1.50x 7.9x

Sonoco Products Co. 45.02 47.94 / 35.64 4,627 5,693 5,032 676 13.4% 1.6% (0.0%) 1.13x 8.4x 1.11x 8.4x

Graphic Packaging Holding Company 14.24 16.14 / 10.76 4,712 6,775 4,176 715 17.1% 0.8% 6.6% 1.62x 9.5x 1.61x 8.9x

Greif, Inc. 38.19 56.53 / 35.85 1,822 3,069 4,140 446 10.8% (5.5%) (10.5%) 0.74x 6.9x 0.78x 7.7x

Average $8,308 $11,448 $8,329 $1,313 15.4% (0.3%) 3.5% 1.38x 8.8x 1.38x 8.5x

Median $6,724 $8,975 $5,591 $923 16.1% 0.8% 6.5% 1.37x 8.4x 1.37x 7.9x

Plastic Packaging

Amcor Limited $11.09 $11.30 / $7.56 $13,230 $16,397 $8,894 $1,266 14.2% 6.2% 13.1% 1.84x 12.9x 1.74x 11.4x

Sealed Air Corporation 48.70 50.11 / 29.85 10,376 14,188 7,669 1,079 14.1% (7.8%) 8.2% 1.85x 13.1x 2.01x 12.2x

Bemis Company, Inc. 45.94 49.44 / 34.34 4,608 5,934 4,289 580 13.5% (2.3%) 4.5% 1.38x 10.2x 1.42x 9.8x

Berry Plastics Group, Inc. 33.47 37.08 / 22.62 4,116 7,823 5,052 745 14.7% (0.1%) 17.6% 1.55x 10.5x 1.55x 8.9x

Huhtamaki Oy 33.66 35.18 / 20.64 3,491 4,173 2,527 288 11.4% 21.3% 28.1% 1.65x 14.5x 1.36x 11.3x

Winpak Ltd. 31.49 34.63 / 19.50 2,047 1,902 798 161 20.1% 9.4% 17.1% 2.38x 11.8x 2.18x 10.1x

Average $6,311 $8,403 $4,871 $686 14.7% 4.5% 14.8% 1.78x 12.2x 1.71x 10.6x

Median $4,362 $6,878 $4,670 $662 14.2% 3.0% 15.1% 1.75x 12.4x 1.64x 10.7x

Rigid Packaging

Ball Corporation $70.99 $77.20 / $59.83 $10,058 $13,539 $8,486 $1,162 13.7% (1.9%) 1.9% 1.60x 11.6x 1.63x 11.4x

Crown Holdings Inc. 55.29 57.08 / 42.50 7,673 13,658 9,101 1,210 13.3% 2.4% 9.6% 1.50x 11.3x 1.47x 10.3x

Rexam plc 8.54 9.21 / 6.48 6,354 8,112 5,972 862 14.4% (0.3%) (2.4%) 1.36x 9.4x 1.36x 9.6x

Owens-Illinois, Inc. 23.90 35.18 / 22.65 3,951 7,438 6,566 1,079 16.4% (2.2%) 0.6% 1.13x 6.9x 1.16x 6.9x

AptarGroup, Inc. 63.77 68.67 / 55.59 3,992 4,442 2,512 458 18.2% (4.6%) (2.4%) 1.77x 9.7x 1.85x 9.9x

CCL Industries Inc. 115.62 126.83 / 77.60 3,989 4,412 2,118 403 19.1% 9.1% 13.1% 2.08x 10.9x 1.91x 9.7x

Silgan Holdings Inc. 54.34 59.26 / 45.94 3,288 5,069 3,873 520 13.4% (2.7%) (0.3%) 1.31x 9.7x 1.34x 9.8x

Average $5,615 $8,096 $5,518 $814 15.5% (0.0%) 2.9% 1.54x 9.9x 1.53x 9.7x

Median $3,992 $7,438 $5,972 $862 14.4% (1.9%) 0.6% 1.50x 9.7x 1.47x 9.8x


PACKAGING

M&A Transactions Strong in Q1 2015 Led by Multi-Billion Dollar Deals ($ in millions, except where noted)


Close Date Acquirer / Investor Target Target DescriptionImplied Enterprise

Value

EV / Revenue

Multiple

EV / EBITDA

Multiple

Pending Rock-Tenn Company (NYSE:RKT) MeadWestvaco Corporation

(NYSE:MWV)

Provides a broad range of consumer

packaging solutions

$8,303 2.00x 11.5x

Jun-15 KapStone Kraft Paper Corporation Victory Packaging L.P. Manufactures packaging products for the

moving and storage industry

$640 0.67x 11.6x

May-15 DS Smith Plc (LSE:SMDS) Duropack GmbH Manufactures corrugated boards and

specialty products

$341 1.10x 7.3x

May-15 Fedrigoni S.p.A. Arjo wiggins Ltda Produces specialty paper products $95 1.21x -

Apr-15 MeadWestvaco Corporation

(NYSE:MWV)

International Paper Company,

Carolina Coated Bristols Business

Manufactures solid bleached sulfate

paperboard

- - -

Apr-15 Central National-Gottesman Inc. Spicers Canada Limited Distributes fine paper, graphic art, sign and

display media, and industrial packaging

$50 - -

Apr-15 Fedrigoni S.p.A. GPA, Specialty Substrate Solutions

Inc.

Distributes printable substrates $50 0.70x 6.3x

Apr-15 PFF Packaging Group Ltd. Intelligent Packaging Solutions Ltd. Manufactures paper and plastic packaging

solutions for food end markets

- - -

Apr-15 Huhtamaki Oyj (HLSE:HUH1V) Butterworth Paper Cups Sdn. Bhd Manufactures foodservice paper cups and

other paper products

$8 - -

Mar-15 CorpAcq Ltd Northern Packaging Ltd Provides corrugated packaging solutions - - -

Mar-15 Ox Industries, Inc. Carolina Paper Tubes Inc. Manufactures spiral wound paper

tubes/cores and big rolls

- - -

Feb-15 Caraustar Industries, Inc. The Newark Group, Inc. Produces and markets recycled paperboard

products

- - -

Feb-15 Crown Paper Group, Inc. PT Holdings Company, Inc. Produces and markets pulp and paper

products

- - -

Feb-15 Graphic Packaging International,

Inc.

Norampac Inc., North American

Boxboard and Converting Assets

Comprises five mills which manufacture

coated boxboards and are located in Canada

$39 0.21x 9.0x

Jan-15 Verso Corporation (NYSE:VRS) NewPage Holdings Inc. Produces and sells printing and specialty

papers

$1,400 0.46x 5.8x


PACKAGING

M&A Transactions Strong in Q1 2015 Led by Multi-Billion Dollar Deals ($ in millions, except where noted)



Value

EV / Revenue

Multiple

EV / EBITDA

Multiple

Jun-15 A. Schulman, Inc.

(NasdaqGS:SHLM)

Citadel Plastics Holdings, Inc. Manufactures thermoplastic compounds and

thermoset resins

$800 1.52x 10.7x

May-15 Coveris Holdings S.A. Elldex Packaging Limited and Elldex

Packaging Australia Pty Limited

Provides plastic packaging for a broad range

of end markets

$21 - -

May-15 Viscofan SA (CATS:VIS) NANOPACK technology &

packaging, s.l.

Manufactures plastics films and bioplastics

films

$8 - -

May-15 Multi-Color Corp. (NasdaqGS:LABL) Mr Labels Pty Ltd Manufactures self-adhesive labels for a

broad range of consumer end markets

- - -

Apr-15 McNeely Plastic Products, Inc. Tara Plastics Corporation Manufactures packaging films - - -

Apr-15 Berwind Corporation Caplugs, LLC Manufactures and sells plastic product

protection products

- - -

Mar-15 Schweiter Technologies AG

(SWX:SWTQ)

Polycasa N.V. Manufactures plastic sheets $136 0.67x -

Mar-15 Wendel (ENXTPA:MF) Constantia Flexibles Group GmbH Manufactures various flexible packaging

products

$1,715 0.84x 6.7x

Mar-15 CoSine Communications Inc.

(OTCPK:COSN)

API Group plc Manufactures foils, films, and laminates that

are used in the consumer packaging

$76 0.44x 5.9x

Mar-15 Transilwrap Company, Inc. CLEAR FOCUS Imaging, Inc. Manufactures perforated films used to

produce see-through window graphics

- - -

Feb-15 Pretium Packaging, LLC Intertech Corporation Manufactures blow molded products and

plastic containers

- - -

Feb-15 RPC Group plc (LSE:RPC) Promens hf. Manufactures plastic packaging solutions

and components

$477 - -

Feb-15 Pamplona Capital Management

LLP

Charter NEX Films Inc. Manufacturer of monolayer, coextruded, and

barrier blown films for packaging

applications

- - -

Feb-15 Multi-Color Corp. (NasdaqGS:LABL) New Era Packaging Ltd Manufactures label products - - -

Jan-15 Huhtamaki PPL Limited

(BSE:509820)

Positive Packaging Industries

Limited

Provides printed and laminated barrier-grade

flexible packaging materials

$336 1.12x -


PACKAGING

M&A Transactions Strong in Q1 2015 Led by Multi-Billion Dollar Deals


($ in millions, except where noted)


Value

EV / Revenue

Multiple

EV / EBITDA

Multiple

Pending Ball Corporation (NYSE:BLL) Rexam plc (LSE:REX) Manufactures and sells beverage cans $6,900 1.50x 10.2x

May-15 Plasdene Glass-Pak Pty Ltd. Silverlock & Co. Pty Ltd Manufactures glass, plastic, and PET bottles

and jars

- - -

May-15 Peak Rock Capital Precision Valve Corporation Manufactures packaging dispensing

systems and solutions

- - -

May-15 MAUSER AG Greif Embalagens Industrialis Do

Brasil Ltda

Manufactures plastic drum and intermediate

bulk containers

- - -

Apr-15 ADA Cosmetics International GmbH Scandinavian Amenities A/S Designs, develops, and supplies soap

dispensers

- - -

Apr-15 Pratt Industries, Inc. Robert Mann Packaging, Inc. Provides a broad range of plastic and rigid

packaging products

$60 0.40x -

Mar-15 Oricon Enterprises Limited

(BSE:513121)

Oriental Containers Ltd. Manufactures packaging products primarily

for liquor, beverage, and cosmetic industries

$24 - -

Mar-15 Meridian General Capital Silver Spur Corporation Manufactures and distributes glass and

plastic bottles

- - -

Mar-15 SMYV Pty. Ltd Vinocor Worldwide Direct Pty Ltd Manufactures and supplies bottling and

packaging products for wine companies

- - -

Feb-15 Owens-Brockway Glass Container,

Inc.

Bennu Glass LLC Manufactures glass bottles, including

bordeaux and burgundy glass bottles

- - -

Feb-15 Crown Holdings Inc. (NYSE:CCK) Empaque Produces metal beverage cans, glass

bottles, and other components

$1,225 1.86x 9.4x

Feb-15 Maynard & Harris Group Limited PET Power B.V. Manufactures various bottles, jars, caps, lids,

and decorations

- - -

Jan-15 Rexam plc (LSE:REX) Rexam UAC Manufactures aluminum beverage cans and

ends

$239 - -


PACKAGING

Overview of Select, Notable Transactions

Rock-Tenn Company’s Pending Merger with MeadWestvaco Corporation – January 2015

Ball Corporation’s Pending Acquisition of Rexam plc – February 2015

Rock-Tenn is one of North America's leading providers of packaging solutions and manufacturers of containerboard and paperboard with 27,000 employees operating from locations in the United States, Canada, Mexico, Chile and Argentina

MeadWestvaco Corporation is a global packaging company providing packaging solutions to customers in the healthcare, beauty and personal care, food, beverage, home and garden, tobacco, and agricultural industries from 125 facilities in North America, South America, Europe and Asia

Rock-Tenn is paying 0.78 of a share (equal to $49.13 per MeadWestvaco share) for all of MWV shares outstanding representing an approximately 8.0x EV/EBITDA multiple after approximately $300 million in synergies

The merger results in numerous strategic and financial benefits, including:

─ Estimated annual synergies of $300 million to be realized by the end of the third year

─ Reduced cyclicality and enhanced financial flexibility

─ Plan to merge U.S. pension plans resulting reduced cash contributions of $300 million over next three years and $550 million by 2024

─ Enhanced global footprint and increased emerging market exposure with growth platforms in North America, Europe, Brazil, India and China

Ball Corporation supplies packaging solutions for beverage, food and household products customers, as well as aerospace and other technologies and services primarily for the U.S. government and employees 14,500 people worldwide

Rexam PLC is a leading metal beverage can maker operating 55 can making plants in more than 20 countries across the globe and around 8,000 employees

Ball Corporation has offered to acquire Rexam plc for approximately $6.9 billion which represents a 10.2x EV/EBITDA multiple

"The combination of Ball and Rexam creates a global metal beverage-packaging supplier capable of... generating significant shareholder value” --- John Hayes, CEO, Ball Corporation

Source: Company press releases, S&P CapitalIQ.


PACKAGING

Moss Adams Capital LLC • Full-service investment bank

and strategic advisor • Dedicated industry

specialists • Advisory and execution • Private equity • Debt • Mergers and acquisitions • Restructuring Long-Term Industry Relationships • All product types • Major markets and metro

areas • Public and private entities • Full range of the capital

stock

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tax, and business advisory firm • 100+ years old • Dominant in western US • Middle-market specialists • Accounting, tax, and

transaction Experience • Real estate accounting best

practices • Senior, experienced tax

specialists • Leverageable transaction

resources International Presence • Dominance in Western US • 2,000 employees in 24 offices • Presence on national/global

basis • Praxity affiliates across US and

more than 100 countries around globe

Leadership through Experience and Results

Moss Adams at a Glance


PACKAGING

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Senior Level Attention

Commitment to our Clients

Professional Excellence

Objective & Independent Advice

Creating Value for Owners

Global Presence & Capabilities

Premier accounting and financial services advice for middle market paper, plastics, and packaging industry companies

Expert Teams – Paper, Plastics, and Packaging Industry Knowledge


PACKAGING

Our Alliance with CFxB consists of 150+ M&A Professionals in more than 25 countries

CFxBorder – Global M&A Reach Through Local Relationships

https://ecollab.mazars.com/cfxb/


PACKAGING

A founding member of Praxity, AISBL, a global alliance of independent accounting firms, Moss Adams gives you access to trusted expertise in 100 countries and territories around the world.

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Australasia Australia, New Zealand

North America United States, Canada

Global Reach

= Praxity Territory


PACKAGING

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paper, plastics, and packaging - moss adams · 7 paper, plastics, and packaging m&a...

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