PACKAGING Q4 2014 - Capstone Partners Packaging_Q4 2014.pdfWith plants in North America and Poland,...
Transcript of PACKAGING Q4 2014 - Capstone Partners Packaging_Q4 2014.pdfWith plants in North America and Poland,...
BOSTON
CHICAGO
LONDON
LOS ANGELES
PHILADELPHIA
SAN DIEGO
SILICON VALLEY
TAMPA
Q4 2014 PACKAGING
CONTACTS David Bench Managing Director (949) 460-6431 [email protected] Tracy Patch Vice President (949) 460-6432 [email protected] Daniel Schultz Director of Business Development (617) 619-3368 [email protected]
M&A UPDATE
Mergers and acquisitions in the packaging industry are benefitting from further improvements in
the economy, which is supporting growth in the industry and continued advances in the sales and
profitability results of many packaging companies. Analysts expect the positive economic
conditions to persist, amid reports that GDP, employment figures, the manufacturing index and
consumer confidence are all advancing in 2014.
At the same time the industry, which is still highly fragmented and composed of many privately
owned businesses, remains ripe for consolidation. As the M&A environment proves robust for
these companies, many of the industry’s private business owners are opting to take advantage of
current conditions as opposed to riding out another full cycle. Having been in business for many
years, these owners understand that their solid earnings and cash flow could suffer should the
economy deteriorate, and they view the current market as an opportunity to retire or otherwise
exit. Concurrently, financial and corporate investors are aggressively seeking the right
investment opportunities, placing sellers in an advantageous position and boosting valuations.
M&A activity is also being prompted by the heightened demands of customers who are requiring
costly packaging innovations and a wider range of products and services, all at a lower cost.
These pressures are prompting many family-owned businesses in the industry to seek buyers
with the resources to better compete in this demanding environment. Add to this the fact that
strategic acquirers and investors have substantial cash available for investment, private equity
firms have billions in dry powder, debt financing is affordable and available, and the equity
markets are strong, and the market appears robust, as reflected by Capstone’s research that
shows, through September, 85 transactions have been recorded in the industry this year.
M&A Activity: Packaging Industry
Sources: Capital IQ, Capstone Partners LLC research
YTD 2014 data as of September 30, 2014
112 109
64 69
88
115
97 85
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2007 2008 2009 2010 2011 2012 2013 YTD 2014
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SELECT PACKAGING TRANSACTIONS
There have been several notable transactions in the packaging industry this year. A
review of recent transactions shows a variety of businesses have sold and activity on
behalf of both corporate and private equity buyers continues strong. Selected
transactions are outlined below, followed by a more comprehensive list in the
following table.
Milestone Transactions – Several milestone transactions have been recorded in the
packaging industry this year, including the following:
Private equity firm Oak Hill Capital Partners is teaming up with company
management to acquire Berlin Packaging from Bahrain-based investment
firm Investcorp Bank BSC for $1.4 billion (about 1.8x revenue). Investcorp
acquired Berlin Packaging in 2007 for $410 million, and has since made four
add-on acquisitions. Berlin Packaging manufactures, imports and distributes
plastic, glass and metal containers and closures. Berlin Packaging was
founded in 1898, has annual revenue of about $800 million, and continues to
be managed by the Berlin family.
NYSE company, Verso Paper Corp is acquiring NewPage Holdings for $1.4
billion, or about 5.8x EBITDA. The company is a materials supplier to the
packaging industry. It produces specialty papers used in commercial printing
as well as in specialty applications, including beverage bottle labels, food and
medical packaging, pressure-sensitive labels and release liners. The
combination of Verso and NewPage is expected to create a stronger business
that is more efficient and better positioned to compete in a competitive
global marketplace.
The Carlyle Group LP (NasdaqGS:CG), a publicly traded investment firm,
acquired the Industrial Packaging Segment of Illinois Tool Works for $3.2
billion in May 2014, then renamed the entity Signode Industrial Group.
Signode is a global manufacturer of strap, stretch and protective packaging
consumables, tools and equipment. Carlyle invested in the company, “a
highly diversified business with strong management, attractive market
positions and excellent free cash flow,“ to leverage Carlyle’s global network
to support the Company’s growth and help it achieve its full potential as a
standalone company.
In April 2014, Ardagh Group S.A. acquired Saint-Gobain Containers/Verallia
North America, a manufacturer of glass bottles and jars for the wine, beer,
beverage, spirit and food container markets in the United States. Saint-
Gobain Containers was formerly known as Ball-Foster Glass Container
Company and is the second largest glass container manufacturer in the U.S.
Based in Luxembourg, Ardagh Group manufactures metal and glass
packaging solutions for various industries worldwide. The closely-held
company, with clients such as brewer Heineken NV and cosmetics maker
L’Oreal, said the acquisition will increase its glass business by almost 60% and
allows the company access to the very important wine sector in the U.S. for
the first time. Ardagh Group won FTC approval to buy Saint-Gobain
Containers after agreeing to sell six of its nine glass container manufacturing
plants in the United States.
Capstone Partners LLC 2
Packaging Q4 2014
SELECT PACKAGING TRANSACTIONS (CONTINUED)
Middle-Market Transactions – In addition to the milestone transactions that have
transpired in the packaging industry this year, there has also been a steady stream of
transactions involving middle market targets and completed by corporate buyers,
many of which are foreign companies. Several of these transactions are briefly
profiled below.
PSB Industries (ENXTPA:PSB) acquired C + N Packaging, Inc. from majority
shareholder Chris Young and several minority shareholders in September
2014. With plants in North America and Poland, C + N manufactures rigid
plastic packaging closures for fragrance, cosmetic, medical and consumer
product industries. The company has about 100 employees, was founded in
1990, and sells to prestigious beauty customers including Avon, Estée Lauder
and Elizabeth Arden. PSB Industries, headquartered in France, manufactures
packaging and specialty chemical products. PSB intends to leverage C + N’s
complementary strengths in order to add to its client portfolio, strengthen its
position in North America, reinforce its presence in the fragrance segment
and increase its offering to customers through added capabilities.
Worldwide Plastics Company, a manufacturer and distributor of R-PET
packaging trays and containers for the produce industry, was acquired by
Orora Limited of Australia in July 2014. Orora manufactures and supplies
fiber and beverage packaging products in Australasia and New Zealand. Its
products are used in the packing of fresh produce; grocery products;
industrial products; meat, poultry, and seafood; spirits and ready-to-drink
beverages; and wine. In addition, the company purchases, warehouses, sells
and delivers a range of packaging and related materials in the United States,
Canada and Mexico. The bolt-on acquisition was Orora’s first acquisition
since its demerger from Amcor Ltd. in December 2013.
Rieke Corporation acquired the remaining 30% stake in Arminak &
Associates, Inc. from founder Helga Arminak and others for $58 million in
March 2014 that included a cash payment of $51 million plus an earnout
payment of up to $7 million, based on the future success of the company.
Helga Arminak will remain as President. Arminak & Associates manufactures
packaging solutions and components for the cosmetic and beauty, personal
care, skin and body care, hair care, cleaning and household product, and
automotive markets. The company offers a wide variety of bottles and
pumps, atomizers, droppers, canisters, lip balm/gloss cases and other
packaging products. The company was founded in 1999 and has about $80
million in sales with manufacturing facilities worldwide. Rieke Corporation, a
subsidiary of publicly traded TriMas Corporation, develops and manufactures
closures and dispensing systems. Rieke had previously acquired 70% of
Arminak & Associates for $64 million in 2012, making Rieke one of the
world's largest manufacturers of foamers and airless dispensers and
providing the company an entrée to cosmetic and personal care customers.
Rieke says the combined superior product portfolio and enhanced design and
innovation capabilities allows the company exceptional speed to market and
manufacturing flexibility, providing a wide choice of standard and custom
designs to meet customers’ unique packaging needs.
Capstone Partners LLC 3
Packaging Q4 2014
SELECT PACKAGING TRANSACTIONS (CONTINUED)
Private Equity Transactions – Each year we report on the high level of private equity
interest and activity in the packaging sector, and 2014 is certainly no exception. In
fact, there seems to be an unusually high concentration of private equity backed
transactions on the list, several of which are profiled below.
In Capstone’s January Packaging newsletter we profiled Pro Mach, Inc., a
particularly active buyer of companies in the industry. Pro Mach is a provider
of integrated packaging products and solutions for food, beverage,
household goods and pharmaceutical companies. The company provides
primary packaging solutions, end-of-line packaging machinery and
identification and tracking equipment. Pro Mach has a long history of
acquisitions dating back to its inception in 1998, when it was founded by
private equity firm Frontenac Co. The company traded private equity hands
in 2004 and again in 2011. Between 2006 and 2013 Pro Mach acquired at
least 18 middle market companies, targeting private businesses in the U.S.,
Canada and overseas, with revenue between $10-$50 million and retaining
the targets’ management teams to continue running the businesses. The
company’s revenue now exceeds $350 million, and it was named to the Inc.
5000 list of fastest growing companies for the third time in a row. Backed by
The Jordan Company, Pro Mach made two acquisitions in 2014 before being
acquired in a pending transaction by private equity firm AEA Investors LP.
Another packaging company with a long history of private equity backing is
Pretium Packaging LLC. In 2010, the company was acquired by private equity
firm Castle Harlan, Inc., for approximately $130 million. In June 2014,
Genstar Capital, LLC, also a private equity firm, acquired the company for
approximately $498 million. Pretium Packaging manufactures rigid plastic
bottles and containers for food, personal care, household products,
healthcare and pharmaceutical end markets in the United States and Canada.
Pretium is said to fit well with Genstar’s investment thesis for the packaging
industry and Genstar expects to pursue an active acquisition strategy, using
Pretium as a platform and investing in similar opportunities “that benefit
from the attractive secular trends driving growth in the packaging industry.”
In February 2014, Chesapeake Limited, a Carlyle Group portfolio company,
and Multi Packaging Solutions, Inc., a Madison Dearborn portfolio company,
merged. Multi Packaging Solutions provides print, packaging and label
solutions for healthcare, entertainment, consumer, beverage, cosmetics and
media end markets worldwide. The company was founded in 2004, when
Irving Place Capital, a New York-based middle market private equity firm and
the former merchant banking arm of Bear Stearns, formed Multi Packaging as
a platform to acquire specialty printing and packaging businesses. Since
then, the firm rolled up seven different businesses serving the
pharmaceutical, multi-media and consumer markets. Chesapeake Limited
was also previously owned in part by Irving Place Capital, but was sold to The
Carlyle Group in July 2013 for $606 million. Following the 2014 merger, each
company has made an additional add-on acquisition thus far in 2014.
Capstone Partners LLC 4
Packaging Q4 2014
SELECTED 2014 PACKAGING TRANSACTIONS
Enterprise Value ($mm)
EV / LTM
Date Target Target Business Description Acquiror Revenue EBITDA
Pending Pro Mach, Inc. Manufactures a wide range of packaging and processing equipment.
AEA Investors LP - - -
Pending MACtac Manufactures & distributes pressure sensitive adhesive products for labels and other packaging products.
Platinum Equity, LLC $170.0 - -
Pending Berlin Packaging, LLC Manufactures, imports and distributes plastic, glass and metal containers and closures.
Oak Hill Capital Partners
$1,430.0 - -
Pending Ranpak Corporation Produces and supplies paper packaging materials and systems.
Rhone Capital, L.L.C. - - -
Pending The Newark Group, Inc. Produces recycled paperboard products for packaging and other applications.
Caraustar Industries, Inc.
- - -
Pending NewPage Holdings Inc. Produces specialty papers for bottle labels, food and medical packaging and pressure-sensitive labels.
Verso Paper Corp. (NYSE:VRS)
$1,400.0 0.5x 5.8x
Sep-14 Graphic Impressions NW, Inc.
Provides print finishing and full cycle packaging services. Guided Products LLC - - -
Sep-14 S. Walter Packaging Corp.
Provides retail packaging products including bags, boxes, tissue, ribbons, ecopackaging and other items.
Larsen MacColl Partners
- - -
Sep-14 Benchmark Automation LLC
Manufactures packaging automation equipment for food manufacturers in the United States.
Pro Mach, Inc. - - -
Sep-14 Pace Packaging Corporation
Manufactures plastic bottle unscrambling systems used in food, beverage, pharma and other markets.
Pro Mach, Inc. - - -
Sep-14 C + N Packaging, Inc. Manufactures rigid plastic packaging closures for fragrance, cosmetic, medical and consumer products.
PSB Industries (ENXTPA:PSB)
- - -
Aug-14 Square Peg Packaging and Printing, LLC
Designs and supplies glass packaging and off the shelf shipping supplies.
Saxco International, LLC
- - -
Jul-14 SFBC, LLC Manufactures folding cartons, display cards and industrial packaging products.
Peninsula Capital; Charter Oak
- - -
Jul-14 Debond Corporation Manufactures medical, food & beverage and electronic packaging products.
Nelipak Corporation - - -
Jul-14 Packaging Concepts + Design, LLC
Designs and supplies automotive module and other packaging solutions.
Midwest Mezzanine; O2 Investment
- - -
Jul-14 Worldwide Plastics Company
Manufactures and distributes R-PET packaging trays and containers for the produce industry.
Orora Limited (ASX:ORA)
- - -
Jun-14 Graphic Packaging Intl., Bags & Kraft Paper Div.
Produces and distributes Kraft paper and bags. Mondi Limited (JSE:MND); Mondi plc
$105.0 - -
Jun-14 Anchor Glass Container Corporation
Manufactures glass containers primarily for beer, food, beverage, liquor, and consumer products.
KPS Capital Partners, LP
- - -
Jun-14 Vista International Packaging, LLC
Manufactures food-packaging products for the meat, cheese and poultry industries.
Oy ViskoTeepak AB - - -
Jun-14 Rigid Packaging North America
Provides custom packaging solutions to consumer products companies the U.S. and internationally.
Coveris Holdings S.A. - - -
Jun-14 Pretium Packaging, LLC Manufactures rigid plastic bottles and containers for food, personal care, household and pharma products.
Genstar Capital, LLC $497.6 2.1x 15.2x
May-14 Hedwin Corporation Manufactures plastic containers for industrial packaging uses worldwide.
Fujimori Kogyo Co., Ltd. (TSE:7917)
$22.2 - -
May-14 Network Packing LLC Engages in the distribution of packaging materials and machinery.
Victory Packaging L.P. - - -
May-14 Geami Ltd. Manufactures protective paper packaging for Fortune 500, catalogers, small businesses and industrial sector.
Ranpak Corporation - - -
May-14 Simpson Tacoma Kraft Company, LLC
Manufactures bleached and unbleached Kraft pulp and linerboard to produce packaging paper.
Rock-Tenn Company (NYSE:RKT)
$311.0 - 6.0x
May-14 Pregis Corporation Manufactures protective and specialty packaging solutions in North America and Europe.
Olympus Partners - - -
Packaging Q4 2014
Capstone Partners LLC 5
SELECTED 2014 PACKAGING TRANSACTIONS (CONTINUED)
Enterprise Value ($mm)
EV / LTM
Date Target Target Business Description Acquiror Revenue EBITDA
May-14 Capri Packaging Inc. Manufactures printed flexible plastic packaging products.
TC Transcontinental Printing Inc.
$133.0 1.9x -
May-14 Simply Lids Inc. Manufactures disposable lids for coffee sellers. Coastal Integrated Services, Inc
$300.0 - -
May-14 Plastic Packaging Corp. Manufactures injection-molded plastic containers and lids for packaging and other uses.
Placon Corporation Inc.
- - -
May-14 Signode Industrial Group
Manufactures packaging consumables, tools and equipment.
The Carlyle Group LP (NasdaqGS:CG)
$3,200.0 - -
Apr-14 Technimark LLC Manufactures consumer packaging for personal care, food & beverage and home care products.
Pritzker Group - - -
Apr-14 PAC Paper, Inc. Manufactures paper-based packaging products in the United States and Western Canada.
Packaging Dynamics Corporation
- - -
Apr-14 Saint-Gobain Containers, Inc.
Manufactures glass bottles and jars for wine, beer, beverages, spirit and food container markets.
Ardagh Group S.A. $1,694.0 - 6.5x
Apr-14 Bemis Company, Inc., Paper Pkgng Division
Manufactures paper packaging products. Hood Packaging Corporation
- - -
Mar-14 Pure Pulp Products, Inc.
Manufactures food service packaging products. Fabri-Kal Corporation - - -
Mar-14 Chippenhook Corporation
Manufactures fixtures, displays and packaging products. Sigma, S.A. - - -
Mar-14 The Excelsior Packaging Group, Inc.
Manufactures and sells plastic bags. Sigma Plastics Group, Inc.
- - -
Mar-14 Arminak & Associates, Inc.
Manufactures packaging solutions for personal care, household products and automotive markets.
Rieke Corporation $58.0 - -
Mar-14 Trojan Lithograph Corporation
Provides printing and retail and industrial packaging solutions.
Arbor Private Investment Company
- - -
Feb-14 Kortec, Inc. Manufactures PET multi-layer and co-injection systems for the PET packaging industry worldwide.
Milacron LLC - - -
Feb-14 Capsule International LLC
Manufactures PET containers for food and beverage companies in the United States and internationally.
Plastipak Packaging, Inc.
$102.5 - -
Feb-14 Tufco Technologies Inc. Provides contract manufacturing, specialty printing and packaging services in the United States.
Griffin Holdings LLC $28.1 0.3x 4.7x
Feb-14 Multi Packaging Solutions, Inc.
Provides print, packaging and label solutions for healthcare, consumer products and other markets.
Chesapeake Limited - - -
Feb-14 FCI Inc. Manufactures change parts for fillers, cappers and other packaging equipment in the beverage industry.
Bevcorp LLC - - -
Feb-14 East Coast Liquid Filling Company
Provides liquid-fill contract packaging solutions. Evergreen Synergies LLC
- - -
Feb-14 Bluegrass Labels Company, LLC
Provides label solutions for home, personal care and food & beverage products.
Multi-Color Corp. (NasdaqGS:LABL)
$80.7 1.3x -
Jan-14 Be Green Packaging LLC
Manufactures and distributes compostable packaging for the food and consumer packaging industries.
The Riverside Company
- - -
Jan-14 Remtec Automation, LLC
Designs, builds and installs robotic packaging and material handling systems.
The C.M. Paula Company
- - -
Jan-14 Iredell Container Corporation
Manufactures and markets corrugated containers for the packaging industry.
Sumter Packaging Corporation
- - -
Jan-14 Star Packaging Corporation
Provides flexible packaging solutions for various industries and applications.
The InterFlex Group, Inc.
- - -
Jan-14 Summit Container Corporation
Manufactures corrugated packaging solutions for customers in the United States and internationally.
Monroe Capital LLC; The Phoenix Group
- - -
Jan-14 Stronghaven Inc. Manufactures and supplies packaging, display and signage solutions.
Hood Container Corporation
$79.0 - -
LTM = last twelve months; EV = enterprise value Sources: Capstone Partners LLC research; Capital IQ; public filings and press releases
Packaging Q4 2014
Capstone Partners LLC 6
Capstone has represented clients across various packaging material and end-market specialties. This focus allows
Capstone to provide packaging companies with real-time transaction feedback and immediate access to key decision
makers among the industry’s most active acquirers and investors.
has been acquired by
has recapitalized with has been acquired by
has been acquired by
Portsmouth
Paper Company
has been acquired by
has been acquired by
has been acquired by
Capstone Partners LLC 7
Packaging Q4 2014
CAPSTONE PARTNERS: A SAMPLING OF PACKAGING TRANSACTIONS
CLIENT
(CONFIDENTIAL)
FOOD INSPECTION & PACKAGING SVCS.
is pursuing a corporate sale
David Bench, Managing Director [email protected] • (949) 460-6431
David is a Managing Director in charge of the Western Region, based out of Los
Angeles. Prior to Capstone, David managed the Western region for Morgan Stanley
Smith Barney’s Capital Strategies Group and its predecessor, Citi Capital Strategies.
David has focused on middle market investment banking for nearly 30 years and has
been the lead banker in over 250 M&A transactions involving both domestic and
foreign corporate buyers, as well as leveraged recaps with private equity sponsors.
David’s achievements in investment banking have gained national recognition by The
M&A Advisor: one of his transactions was awarded the “Private Equity Deal of the
Year,” while another was recognized as the “Energy Deal of the Year.” Mr. Bench has
also been awarded “Middle Market Financing Professional of the Year,” an award
recognizing M&A’s most accomplished professionals. Mr. Bench holds a BS and an
MBA in Finance from Brigham Young University. He is a Series 7 and 63 Registered
Securities Representative and a Series 24 Registered Securities Principal.
Tracy Patch, Vice President [email protected] • (949) 460-6432
Tracy is a Vice President in the Los Angeles office, supporting the management of the
Western Region. Prior to Capstone, Tracy worked as a senior banking professional in
Morgan Stanley Smith Barney’s Capital Strategies Group and its predecessor, Citi
Capital Strategies. She possesses over ten years of experience in middle market
investment banking, working on both domestic and cross-border transactions. Her
previous finance experience includes working in the hedge fund industry with
Collins/Bay Island Securities LLC and Talisman Capital Partners. Prior to that, Mrs.
Patch worked with institutional fixed income sales at Vining Sparks IBG, LP and
Robert Thomas Securities, Inc. She also was a manager at The Disney Company. Mrs.
Patch holds an MBA from Pepperdine University and a BS in Finance from Miami
University of Ohio. She is a Series 7 and 63 Registered Securities Representative.
Daniel Schultz, Director of Business Development
[email protected] • (617) 619-3368
Dan oversees Capstone’s national business development and industry coverage
activities, working closely with current and prospective clients of the firm on matters
related to corporate sales, recapitalizations, mergers & acquisitions and growth
financings. In his role, Dan is able to deliver specific market intelligence to clients
regarding M&A, financing, strategic, industry and competitive trends. Prior to
spearheading the firm’s business development and market initiatives, he was a Vice
President in Capstone’s M&A group, managing numerous successful transactions
across a variety of industries. Dan also gained hands-on transaction experience as an
investment banker at Headwaters MB. He started his career with Ernst & Young’s
National Professional AABS practice and later worked in Assurance and Advisory
Business Services in the Denver office. Dan received a BE in Biomedical Engineering
with a Business Minor from Vanderbilt University. He earned an MBA and a Master
of Accountancy from the Daniels College of Business at the University of Denver.
Packaging Q4 2014
Capstone Partners LLC 8
THE PACKAGING TEAM
ABOUT CAPSTONE PARTNERS
Capstone Partners LLC is a premier investment banking firm dedicated to serving
the corporate finance needs of middle market business owners, investors and
creditors. The firm provides corporate sale & divestiture, merger & acquisition,
private placement, corporate restructuring, valuation and financial advisory
services. Capstone maintains various industry specialties including one in the
Packaging sector. The firm also has a merchant banking capability to actively co-
invest in transactions. Headquartered in Boston, Capstone has offices in Chicago,
London, Los Angeles, Philadelphia, San Diego, Silicon Valley and Tampa.
© 2014 Capstone Partners LLC. All rights reserved.
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