US plastics, packaging M&A through Q3 up 2% year on year

10 December 2012 19:15  [Source: ICIS news]

HOUSTON (ICIS)--Merger and acquisition (M&A) activity in the US plastics and packaging industry remained strong in the third quarter as deal volumes in 2012 increased by nearly 2% year on year, an investment banking firm said on Monday.

Plastics and packaging M&A activity totalled 280 deals through the third quarter, compared to 275 during the same period last year, P&M Corporate Finances said in its report.

Deal flow by quarter remained stable with a high of 96 transactions in the first quarter, 94 in the second and 90 in the third.

P&M said the third quarter was influenced by the US election process, active tax planning into the 2012 year end, slow growth rates with uncertain forward indicators and strong interest in public equities.

The very strong buyer demand exceeded the available supply of quality businesses for sale, creating a seller’s market that generates interests from both financial and strategic buyers, the firm said.

In individual product segments, custom moulding and building products had significant increases of 9% and 4%, respectively, year on year, P&M said. Meanwhile, plastic packaging still accounted for about a third of all transactions with a 1% increase year on year.

P&M said the current M&A market can be expected to continue if companies remain in growth mode and if the debt market continues to be favourable with increased leverage multiples and low interest rates.

“In the near term, including the first several months of 2013, we believe that conditions for a seller’s market are likely to be sustained,” P&M said. “For buyers, this environment may serve to increase the availability of quality targets and create opportunities for new or existing investments.”

By: Tracy Dang
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