Merger mania and consolidation has hit Europe's plastics packaging sector, with private equity playing a major role in consolidating the industry, according to a new report.
The interest of private equity in the segment could help make the packaging supply chain more efficient for processors. But the trend is also consolidating suppliers, making manufacturers more dependent on fewer sources holding greater pricing power.
In the report Applied Market Information (AMI) found that the top 50 companies represent about 40 per cent of the total sales of plastics packaging in Europe in 2006, compared to 30 per cent in 2002.
The top players ranked are therefore becoming more and more powerful, according to the report.
AMI found that 14 of Europe's top 50 plastics packaging companies are now owned by private equity investors, compared with just one in 2002.
The 50 groups ranked by AMI in the report were selected on the basis of sales of plastics packaging in Europe.
From its estimates AMI calculates that the 50 groups accounted for sales of about €21bn in 2006 and used some 7.7 million tonnes of polymer materials at over 650 plants.
In AMI's top 50 plastics packaging producers survey, Amcor led the roost with estimated annual plastics packaging sales in Europe totalling €2,070m.
Australia-based Amcor only recently knocked the Austrian company Alpla-Werke off the top position, having integrated Schmalbach Lubeca's polyethylene terephthalate (PET) business into its operations.
Europe's third largest plastics packaging company, Alcan Packaging, is due to be sold this year. Rio Tinto's bid of $38.1bn for the Canada-based Alcan has been accepted by Alcan's board of directors and an announcement is expected in the third quarter of 2007.
The two companies have agreed to sell off Alcan Packaging as part of the take-over deal announced in July 2007.
"Other acquisitions highlighted in the report illustrate the high level of corporate change and restructuring taking place amongst leading plastics packaging companies," AMI stated. "These groups can often only survive in the competitive packaging business by focusing on niche segments and by expanding internationally, not just within a European context, but also globally."
The strategy so far has been achieved through a process of either divestment or merger and acquisition.
"Nearly all the major companies covered in AMI's survey have seen some significant change in structure or ownership in recent years," the analyst stated.
Other notable acquisitions over the past 12 months include Sun Capital Partners purchase of Autobar, and the sale this year by Cinven and JP Morgan of Klöckner Pentaplast to the Blackstone Group, and OEP's sale of Mauser AG to DIC.
The top 10 plastics packaging producers in Europe ranked by sales are Amcor, Alpla-Werke, Alcan Packaging, Huhtamäki, Sealed Air, Linpac, RPC, RKW, Global Closure Systems, and Klöckner Pentaplast.
Source: foodproductiondaily
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