Global Healthcare Packaging Consolidation

Transcription

Presentation to:
Global Healthcare Packaging Consolidation:
LEAD, FOLLOW, OR GET OUT OF THE WAY
March 9, 2011
www.blaige.com
Page 2
Over the past decade how many of the top 50 companies in
each of the major packaging segments have been eliminated or
have had a change in ownership?
a. 5%
b. 10%
c. 50%+
© Copyright
2011, All Contents Thomas Blaige & Co. LLC
Answer: C
On average, 53% of the top 50 companies
since 2001 have been eliminated or
changed ownership.
Page 3
Benefits of M&A Knowledge
Technical (Engineer)
General Manager (Executive)
 M&A knowledge and
experience can provide the
opportunity to become a
more valuable employee
 Strong employees with deal
team experience transition
easily into a CEO role
 Awareness of shifting
competitive landscape can
 When a future M&A
maximize CEO’s
opportunity arises you must
effectiveness of managing
be prepared to move
company as well as dealing
quickly and effectively to
with suppliers and
have a positive impact
customers
© Copyright
Objectives for You – How to “Win”
 Deeper Understanding– Of risks, opportunities, and your
situation
 Develop a Plan/Strategy– Lead, Follow, or Get Out of the
Way
 Survive and Thrive– There are winners and losers in a deal
Today’s presentation-- To assist each participant on a personal,
professional and corporate level to maximize potential in an
increasingly challenging business environment.
© Copyright
Page 4
Page 5
Pure Focus. Premier Value.SM
Blaige & Company’s Pure Focus has resulted in its position as the
largest specialty investment bank of its kind.
Our advantage is rooted in two unique and significant capabilities:
 Strategic and operational approach (rather than
financial/transactional)
 Plastics, packaging, and chemicals only.
Blaige & Company’s senior advisory professionals have
personally managed, owned, or visited over 600 plastic,
packaging, and chemical operations in 40 countries and have
completed over 150 value-enhancing transactions in plastics,
packaging, and chemicals.
Blaige & Company
Global Operating Experience, Exclusive Focus, Unmatched Results
© Copyright
Page 6
AGENDA
Page 7
Section
 Major Themes Reflected in Packaging
I
M&A in 2011
 Packaging Industry Global Consolidation
II
 M&A Activity in the Global Packaging Market
III
 Healthcare Packaging Consolidation
IV
 The Art of the Deal:
Maximizing Value in M&A Transactions
V
 Summary
VI
Page 8
Major Themes Reflected in Packaging
M&A in 2011
© Copyright
Page 9
Major Themes Reflected in Packaging M&A in 2011
 Consolidation – Transforming Competitive
Landscape at All Levels
 Regulated Markets – Driving Premium Valuations
 Global Supply Chain – Consolidation of Vendors
 Institutional Practices – Required for Funding /
Growth at All Levels (Including Mid Market)
 Blaige Ten Year Consolidation Study –
Segmentation: “Leaders, Followers, Others”
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Page 10
Packaging Industry
Global Consolidation
© Copyright
Page 11
Packaging Industry Global Consolidation
The “Leaders,” “Followers,” and “Others”
Top Consolidators
(“Leaders”)
• 10- 20% of universe
• Rapidly gaining share
• Aggressive acquisitions and
divestitures
• Market domination via best
acquisitions, selective
divestitures
Static Participants
(“Others”)
• 60-80% of universe
• Share erosion
• Mergers and selective
acquisitions
• Pursue niche leadership
Consolidatees
(“Followers”)
• 10- 20% of universe
• Rapidly losing share
• Restructuring and
divestitures
• Sell at maximum Price
Page 12
Packaging Industry Global Consolidation
Evolution across packaging types show that Flexible Packaging is due for
Significant Consolidation
Segment
Glass Bottles
1980
19 competitors
2011
3 Leaders: 90% share
(Anchor, Owens, St. Gobain)
Food Cans
25 competitors
(Ball, Crown, Silgan)
Beverage Cans
14 competitors
(Ball, Crown, Rexam)
Flexible (Plastic)
Packaging
© Copyright
Many competitors
(Amcor, Bemis, Printpack, Sealed
Air)
Page 13
Summary—Over 50% of Top 50 Players have Sold / Merged in
Past Decade
Sample Below (Averages):
 40% Eliminated; 13% Changed Ownership; 53% Merged/Sold.
 An Additional 20% Have Used M&A as a Strategy.
Consolidation of 2001's Top 50 Companies
Sector
Eliminated
Changed Ownership
Total
Film & Sheet Top 50
40%
14%
54%
Label Converters Top 50
34%
14%
48%
Blow Molder Top 50
40%
10%
50%
Thermoforming Top 50
44%
12%
60%
Flexible Packaging
Rigid Packaging
© Copyright
Page 14
M&A Activity in the Global Packaging
Market
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Page 15
M&A Activity in the Global Packaging Markets 2002-2010
1,552 Packaging Transactions Analyzed by Blaige & Company
Plastic Packaging
Fiber Packaging
Metal and Glass Packaging
1099 Transactions
71% of Packaging
transactions
407 Transactions
26% of Packaging
transaction
46 Transactions
3% of Packaging
transactions
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Page 16
M&A Activity in the Global Packaging Markets
Plastic Packaging Accounts for nearly 30% of All Plastics Deals
 2002-2010: plastic packaging deals more than tripled from 50 to 159 (average 122).
• 2002-2005: majority flexible packaging deals.
• 2006-2009: majority rigid packaging deals.
• 2010: deals were evenly split between flexible and rigid.
© Copyright
CAGR 14%
Packaging Deals
Global Plastic Packaging M&A Activity
Source: Blaige & Co
.
Page 17
Global Packaging Geography Profile: Growth in International and Cross-Border
Transactions
2010 Geography
2003 Geography
US Only
24%
US Only
35%
International /
International
52%
International /
US
13%
125 Transactions
© Copyright
International /
International
58%
International /
US
18%
159 Transactions
Page 18
Plastic Packaging: Strategic and Add-On Acquisitions -- 84% of Deal Activity
2003 Buyers
2010 Buyers
Financial Platform;
16%
Financial Platform;
22%
Financial AddOn;
14%
Strategic
Buyers;
64%
125 Transactions
© Copyright
Financial AddOn;
18%
Strategic
Buyers;
66%
159 Transactions
Page 19
Cumulative PE Capital Overhang (Uninvested Equity)
Over $1.5 trillion of buying power!
600
450
500
Amount
In Billions
(USD)
485
375
400
300
175
200
100
0
20
35
45
2003
2004
2005
© Copyright 2011, All Contents Thomas Blaige & Co. LLC
70
2006
2007
2008
2009
2010
Page 20
Film & Sheet
100
80
60
40
20
0
Average = 67 Deals
66
92
74
46
33
13
31
54
62
74
58
43
16
23
22
9
12
12
66
91
76
58
45
59
70
41
17
31
33
21
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
Industrial
Packaging
© Copyright
Source: Blaige & Company
Page 21
Film & Sheet Headline Deals
Key Industry Participants Have Been Very Active

Amcor acquired Alcan’s global pharma (80 plants) for $1.95 billion
– Also acquired Alcan Medical Flexibles for $66 million, B-Pack Due (CPP
films, Italy) for $60 million, and Ball Corp’s blow molding business for $280
million and
 Printpack purchased Amcor’s N.C. Medical Flexibles Plant ($30 million sales)
 Constantia Flexibles acquired by One Equity Partners; bought Amcor Tobepal
in Spain for $118 million
 Berry Plastics acquired Pliant Corporation

Mid Oaks Investments acquired Plastic Packaging Technologies

Inteplast Group acquired Speci-Gard Medical Packaging
 Sigma Plastics acquired McNeely Plastic Films and Excelsior—Vancouver,
representing a total of 26 deals completed since 1990
© Copyright
Page 22
Thermoforming
19
20
15
15
10
5
0
Average = 13 Deals
16
9
6
3
6
8
2
4
11
3
3
15
10
7
6
8
9
8
12
7
2
5
16
3
3
17
12
5
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
Industrial
© Copyright
Packaging
Page 23
Thermoforming Headline Deals

Rank Group acquired Pactiv Corporation
– Blockbuster deal of 2010 - $6 billion
– Pactiv acquired PWP Industries; adds successful food thermoforming before it
sells itself to Rank

Sonoco Products acquired Associated Packaging Technologies (Castle Harlan) for
$120 million

Odyssey Capital acquired Peninsula Packaging

Brentwood Industries acquired Reynolds Medical Thermoformed Packaging

Oaktree Capital Management and Avenue Capital Group acquired a controlling
interest in Tekni-Plex
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Page 24
Label
70
60
50
40
30
20
10
0
© Copyright
60
Average = 40 Deals
22
7
28
9
15
19
2003
2004
17
26
30
12
43
18
2005
2006
Converters
52
51
25
36
13
23
2007
2008
Supply Chain
41
12
19
29
33
2009
2010
Page 25
Label Headline Deals

Novacap acquired Smyth Companies
– The Hickey family previously owned and operated Smyth for more
than 100 years
 YORK Label (Diamond Castle Holdings) acquired Southern Atlantic
Label
– York completes 9th acquisition, focus on food and pharma

Financial sponsor Genstar Capital sold Fort Dearborn to KRG Capital

Advanced Web Technologies acquired by Private Capital Management
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Page 26
Fiber Packaging & Materials
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Page 27
Fiber Packaging and Materials Headline Deals
Key Industry Participants Have Been Active

Rock-Tenn acquiring Smurfit-Stone Container for $3.5 billion

Chesapeake Corporation
(Poland)

Colbert Packaging completed two acquisitions:
–
Dayton Carton
–
Crown Paper Box
(Irving Place Capital) acquired Cezar SA

Clondalkin Group PLC acquired Catalent Printed Components

Menasha/Cortegra has made several acquisitions

Tegrant acquired Dot Packaging
© Copyright
Page 28
Healthcare Packaging
Consolidation
© Copyright
Healthcare Packaging Segmentation
 Hospital Packaging &
Supplies
– Hospital Sterilization
including: pouches, wraps,
etc.
 Medical Devices
– Packaging for antimicrobials,
kits & trays, tubing, etc.
 Pharmaceuticals
– Packaging for pharmaceutical
ointments and creams, pre
filled syringes, bulk drugs,
etc.
© Copyright
Page 29
Trends in Healthcare Packaging M&A
Page 30
Buy vs. Build: In the healthcare packaging markets, acquisition is often a more
favorable entry strategy than organic growth
Profitability: Due to the perception of above average profitability and growth,
healthcare packaging companies trade at higher (premium) valuations versus
general packaging.
Multiple Capabilities/Narrowing Supply Base: As global healthcare products
companies continue to narrow the base of suppliers it becomes more important
for suppliers to offer a broader range of packaging products, materials, and
processes.
© Copyright
Page 31
Medical Packaging
Deal Activity
70
60
Average= 43
50
47
40
16
60
50
53
55
14
Packaging
Other
19
28
36
32
2009
2010
23
30
20
10
0
17
5
18
31
10
12
2004
39
27
8
2005
2006
2007
2008
2010 Buyers
Financial Add- On
53%
2010 Geographic
International/
International
37%
Financial
Platform
U.S./ U.S.
50%
Strategic Buyer
20%
© Copyright
International/ U.S. 13%
Healthcare Packaging Consolidation
Page 32
Less than 1/3 of Medical/ Pharmaceutical Packaging leaders have both flexible and rigid
capabilities
Company
Beacon Converters
Constantia
Oliver-Tolas
Printpack
Home
Country
Flexible Packaging
Pouches &
Bags
Film & Foil Lidding
Rollstock

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Reynolds
Rollprint
Sealed Air (Cryovac)
Technipaq
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Labels
Trays &
Clam Shells


Tek Packaging
Rexam
MeadWestvaco

CCL
Winpak
Bemis
Clondalkin
Berry Plastics
Amcor
© Copyright
Folding
Carton

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Prent
Qosina
Rigid Packaging
Caps &
Closures
Bottles
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M&A Activity in Healthcare Packaging
Page 33
Operations:
Headquarters in U.S. operating in 51 countries world wide with over 100 manufacturing
facilities worldwide.
Annual Sales: Revenue of $4.5 billion in 2010
Selected Transactions:
- 1995: Acquired Cryovac for $1.26 billion
- 2001: Acquired Epsilon Opti Films
- 2007: Acquired Nelipak Holding BV
- 2007: Acquired Alga Plastics Co, a thermoformer, to procure rigid packaging
capabilities
© Copyright
Operations: Headquarters in U.S. operating in 13 countries with 81 facilities
Annual Sales: In 2010 record annual net sales of $4.84 billion
total company organic sales growth of about 7 percent
acquisition related growth of about 31 percent
- 1996 Acquired Perfecseal, Inc.
- 2007 built greenfield pharmaceutical packaging plant in New London, WI
- 2009 built greenfield medical device plant in Suzhou, China
- 2010 Acquired from Alcan Food Americas (23 plants) for $1.2 billion, as well as
Alcan’s Brazilian pharmaceutical packaging operations
© Copyright
Page 34
Operations: Headquarters in Australia operating in 43 countries with 300+ sites
Annual Sales: annual sales of A$14 billion
- 2003: Acquired Rexam Medical Flexibles for $330 million
- 2010: Acquired Alcan global pharma (80 plants) for $1.95 billion
- 2010: Acquired Alcan Medical Flexibles (4 plants) for $66 million; subsequently
divests Marshall Flexibles plant to Printpack
- 2010: Acquired B-Pack Due (CPP films, Italy) for $60 million
- 2010: Acquired Ball Corp’s blow molding business for $280 million
© Copyright
Page 35
Page 36
Operations: Headquarters in U.S. with operating in 5 facilities in U.S., Netherlands and
China
Annual Sales: Estimated $100 million +
- 2007: Mason Wells (private equity) purchases Oliver Products Company
- 2008: Acquires Tolas Healthcare Packaging from Oracle Packaging
© Copyright
Operations: Headquarter in Austria with 44 production facilities
Annual Sales: 1.1 billion euros in 2010
- 2006: Acquired Hueck Folien
- 2008: Constantia divested Multifilm to Management
- 2010: One Equity Partners acquires Constantia Flexibles
- 2011: Acquired Tobepal in Spain for $118 million
© Copyright
Page 37
Page 38
Operations: Headquarters in Ireland, operating in 10 countries throughout Europe &
North America with 45 production facilities
Annual Sales: Annual sales in excess of €900 million
- 2004: Acquired by Warburg Pincus (private equity) for $786 million
- 2006: Acquired Pharmagraphics LLC
- 2007: Acquired Keller Crescent Co
- 2011: Acquired Catalent Pharma Printed Components business
© Copyright
Page 39
Operations: Headquarters in Omaha
Annual Sales: $200+ million (built through 9 acquisitions)
- 2010: Acquired Southern Atlantic Label
- 2008: Acquired Etiprak, S.A. and Etiquetas Industries
- 2008: Diamond Castle Holdings purchased York Label from Wind Point Partners
- 2007: Acquired Cameo Crafts and Package Service Company
- 2006: Wind Point Partners purchased York Holdings from Huron Capital and merged
with Industrial Label Corporation to form York Label; acquired LSK Labels
and Asheville, NC facility from Quality Assured Label
- 2002: Acquired by Huron Capital
© Copyright
Page 40
The Art of the Deal:
© Copyright
Page 41
Important Quote: The Art Versus the Science of Deal Making
“The merger business is 10% financial analysis and
90% psychoanalysis”
– Financier: The Biography of André Meyer: A Story of Money,
Power, and the Reshaping of American Business
© Copyright
Page 42
EBITDA Multiples for Select Flexible Packaging Companies in
2010
12.0x
EBITDA Multiple
10.0x
8.6x
8.6x
10.1x
8.0x
7.3x
8.0x
6.0x
Average = 7.5x
5.1x
4.9x
4.0x
2.0x
0.0x
© Copyright
B-Pack Due SpA
Pactiv
Corporation
Higashiyama Film
Alcan Food
Americas
Alcan Food,
Pharma, and
Tobacco
Etimex Solar
GmbH
Viskase
Companies
Page 43
EBITDA Multiples for Select Rigid Packaging Companies in 2010
EBITDA Multiple
12.0x
10.0x
8.0x
8.6x
6.4x
8.6x
7.7x
6.0x
4.0x
2.0x
0.0x
© Copyright
8.5x
5.3x
Average = 7.1x
8.0x
6.6x
7.0x
6.2x
5.2x
Page 44
Franchise Value Can Far Exceed Financial Value
Value to Prospective Buyer
Highest
Geographic Market Expansion
New Technologies
New Brands or Franchises
M&A
Valuation
Complementary Products
New Product Market Beachhead
Key Customer Relationships
Lowest
Market Share Fold-ins
Lowest
Multiples
© Copyright
Valuation
Multiples
Highest
Multiples
Page 45
Documenting and Demonstrating Franchise Value
 Effective Positioning is Critical to Get Full “Credit”
– Detail and document strengths and opportunities Confidential Memorandum
– Focus on future potential and synergies, not past history
– Involve key managers – they must “own” the process
– Identify and address the negative issues up front
– Prepare a compelling Management Presentation to showcase your team’s
vision and capabilities
– Absolutely do not miss your budgets during the process
Start Now! For each year that you plan for a deal you add
10% to your valuation.
© Copyright
Page 46
Although Very Tempting, Never Consider a Preemptive Offer
Leverage
Seller
Buyer
Management
Presentation
© Copyright
Multiple
Offers
LOI
Negotiation
Exclusivity
to Buyer
Closing
Page 47
A Single Offer is Likely to Converge at 70% of the Final Price Due to Competitive Pressure
Competition = Maximum Value
Number of Buyers
Serious Indications of Interest
(typically 10 data points)
Valuation (% of Final Transaction Price)
© Copyright
90%
75%
60%
45%
30%
15%
0%
Final Transaction Price
Page 48
Summary
© Copyright
Objectives for You – How to “Win”
Today’s presentation-- To assist each participant on a personal,
professional and corporate level to maximize potential in an
increasingly challenging business environment.
© Copyright
Page 49
Summary: Success in Consolidation
 Understand Risks,
Opportunities, and Your
Situation
 Develop a Plan: Lead,
 Follow, or Get Out of the Way
 Execute (the Plan)
 Survive and Thrive (Win)
 Good Luck!
© Copyright
Page 50
Presentation to:
Global Packaging Consolidation:
LEAD, FOLLOW, OR GET OUT OF THE WAY
March 9, 2011
www.blaige.com

Global Healthcare Packaging Consolidation

Transcription

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