The deals continue
Neil Farmer discusses recent mergers and acquisitions activity and details how the trend will continue throughout 2017
In my column I have always extolled the virtues of globalisation. I firmly believe that international trade, market expansion and development of new innovative products in emerging market can only be a good thing.
This view is not necessary a popular one. Protectionism, tariffs and international trade barriers seem to be the order of the day.
I offer my opinion based on a career in international business which has allowed me to see first- hand the benefits of global trade, allowing companies to expand their business activities and in so doing creating new markets. Which is why, in a year of economic uncertainty, recent stories about mergers and acquisitions (M&A) in the packaging industry have reaffirmed my view of the positive benefits of international trade. Take, for example, the deal announced just before Christmas 2016 of Canadian-based label and packaging group CCL Industries agreeing to buy film packaging company Innovia Group for £680 million. This must rank as one of the most significant M&A transactions in the industry. CCL is one of the largest speciality label groups in the world, with annual revenues of CAN $3.0 billion. It employs more than 19,000 people and has 150 manufacturing facilities in North America, Latin America, Europe, Asia, Australia and Africa. Of course an important part of the transaction was the acquisition of Innovia`s skills and expertise in polymer banknote production. The recently-launched £5 banknote in the UK was produced by the company. The deal enables CCL to become a leader in this fast-growing technology. I can only see operational, customer and product innovation growth emanating from this. It is an example of how globalisation and critical mass can help technology grow the market for new products.
Two acquisitions in December 2016 by RPC Group in buying Dutch-owned storage solution company ESE World and Astrapak in South Africa confirmed its strategy of targeted international expansion. In the case of ESE it enabled RPC to expand its product offering in Europe and with Astrapak it created a foothold in the sub-Saharan market. RPC now has operations in 30 countries and employs 20,000 people. There will be substantial growth for the company over the next five years as advances in plastics technology continue, enabling materials to improve in functional performance and become more environmentally friendly.
Add to this Dutch private equity group Egeria completing the acquisition of Clondalkin Flexible Packaging Group, also in December, and the report that German-based rigid films maker Klockner Pentaplast Group was planning an initial public offering (IPO), you can see why I am bullish about the international market in 2017. Whilst we might be unsure about the political landscape in relation to Russia over the next four years, this has not stopped USA flexible packaging group Sealed Air Corp from launching production at a new Euros 9.5 million food packaging plant at Volgograd in South Western Russia. Sealed Air first entered the Russian market in September 1993 when the now merged packaging business Cryovac established a joint venture. Since then it has helped transform fresh food packaging in Russia.