European flexible packaging companies look to mergers, acquisitions in attempts to compete with Amcor; financial analysts see strong return in flexible packaging acquisitions

NORTHAMPTONSHIRE, England , November 16, 2011 (press release) – Amcor now controls around a quarter of the €11 billion European flexible packaging market, prompting a gold rush of companies trying to beef themselves up to compete or just to be seen as credible second suppliers. Flexible packaging converters and suppliers have merged or acquired competitors and channel partners, and major investment houses have joined in the feeding frenzy as flexible packaging right across the region is moving, developing and changing before our eyes. PCI Films Consulting’s Quarterly Business Reports have documented the developments as they have happened. Here are some recent highlights:

In October, private equity group Sun European Partners showed their intent. Not content with Britton Group (UK), Reuther Verpackung (Germany), Veriplast Flexible Solutions (France), and Unterland Flexible Packaging (Austria), they added to their portfolio of European flexible packaging interests with the acquisition of Kobusch Sengewald from US packaging group Pregis. The consolidation of these businesses under the Britton Group banner has created, in little more than a year, a flexible packaging group ranking amongst the top ten in Europe. In August, Europe’s second largest flexible packaging group, Constantia, added a majority shareholding in Turkey’s third largest flexible packaging converter, Asas, with annual sales of €63 million and production in both Turkey and Romania. Constantia see Asas as part of an international growth strategy and gives them expansion opportunities in the Middle East, North Africa and South Eastern Europe.

Also in 2011, US group Ampac picked up Swiss converter Elag Verpackungen, adding to their purchase of German stand-up-pouch producer Floeter Flexible Packaging Group in 2007. It’s clear that Ampac are making a very strong approach to the European stand-up pouch market, to add to their powerful position in the US pre-formed pouch sector.

Elsewhere in the supply chain, US Spraying and dispensing equipment manufacturer Nordson agreed terms for Belgian equipment company Constructiewerkhuizen G Verbruggen NV, manufacturer of flat dies and extrusion equipment for makers of multilayer flexible packaging. German speciality chemicals group Altana picked up the Color Chemie Group, with 2010 sales of €46 million, producers of water-based speciality printing inks, primarily used on cartons but also on carrier bags, films, gift wrap and wallpapers. In a major development, Brazilian polymer group Braskem has acquired Dow Chemical’s global polypropylene business, increasing their capacity by over a million tonnes to around 7.5 million tonnes pa.

Financial analysts identify flexible packaging companies as attractive prospects to strategic and equity buyers. Some have referred to the fact that the strength of return of flexible packaging companies is linked to the resilience of the end use markets typically served.

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