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Packaging M&A Update4Q 2019

CONTENTS

2 Deal Analytics7 Largest Deals9 Public Comps11 Industry Trend14 Our Service Offerings15 Selected Transactions16 Our M&A Deal Leaders

Trevor HulettManaging [email protected]

Jason [email protected]

For more information on R.L Hulett & Co. or this report please visit our website at rlhulett.com or call us at (314) 721-0607

REPORT HIGHLIGHTS

The fourth quarter of 2019 saw the fewest number of deals closed in over three years in the Packaging sector

Q4 lower middle-market transaction volume in the $0 - 50MM EV tranche ticked down slightly while the larger $50-500MM EV tranche saw an uptick in transaction volume over Q3

PE buyers outpaced strategics in deal volume in 2019 for the first time in over six years, but strategics still managed to invest more total capital than PE buyers in 2019

The merger between Ardagh Group's Food and Specialty Metal Packaging Division and Exal Corporation in an $2.5 billion deal represented the largest deal in Q4

Stock prices and valuation multiples slightly trended upwards through 2019

Packaging M&A Update | 4Q 2019

Source: PitchBook Data, data as of 02/12/2020 R.L. Hulett & Company, Inc.

We tracked all 48 deals in the Packaging Sector in Q4 2019 across the globe, and Europe was the most active market with

22 deals followed by North America with 19. Together, these two regions accounted for over 85% of all closed deals in

Q4.

0 1-5 6-20 >20

2219

United States Regions

Canada: 1

In the North American market, the Great Lakes region was the most

active in Packaging transactions in Q4, with 6 closed deals. Transactions

of note in the Great Lakes include Sabert’s acquisition of LBP

Manufacturing and MSI Express’s takeover of Power Packaging.

The West Coast region contributed 3 deals, or 17% of the total, followed

by the Mountain, South, and Midwest regions, with 2, 2 and 1,

respectively. Outside of the U.S., the acquisition of Enterprises ImportFab

by Labomar is the only deal closed in the Canadian market in Q4.

Global Deal Analytics

3

2

West Coast: 3

Great Lakes: 6

Mountain: 2

South 2

Midwest: 1

Other: 4



Glass & OtherPaperPlastics Metal

Among the 48 packaging deals in Q4 2019, 20 deals came from the plastics subsector, making it the most active of the

four subsectors tracked in terms of M&A activities. The paper and glass packaging subsectors followed behind with 16

and 8 deals, respectively. The metal packaging subsector had the fewest deals but saw the largest deal value in all

transactions disclosed in Q4.


Deal by Subsector

20

4

16

8



Since 2014, we have tracked 1737 packaging

deals across the globe, 492 of which have

disclosed details on transaction size. The

following analytics represent the data that is

available to us on the private markets.

Deal volume in this sector dropped to 48

deals in Q4, down 25% from 64 deals in Q3,

and represented the lowest level in the last

three years. Total deal volume in 2019 was

down 24% from 2018 levels.

2015 was a record year for M&A activity in

the Packaging sector but appears to have

peaked and has been in a modest decline

since. From its peak of 341 deals reported in

2015, deal volume was off 35% at 223 deals

in 2019.

In 2018, total capital invested for all deals

disclosed soared to $34.7B, up 63% from

$21.3B in 2017. Of note was a sharp increase

in larger transactions of $1000MM+ from

$12.2B in 2017 to $25.8B in 2018. Similar to

deal volume, total capital invested in 2019

declined 31% from 2018 to $23.9B.


48

64565556

77817975757783

-

20

40

60

80

100

4Q3Q2Q1Q4Q3Q2Q1Q4Q3Q2Q1Q

201920182017

Deal Volume

223

293 310 310

341

260

-

50

100

150

200

250

300

350

400

201920182017201620152014

Deal Volume

0.30.50.71.00.80.8 3.34.94.14.06.53.7 1.54.54.35.01.9

2.5

19.8

25.8

12.215.6

24.532.8

23.9

34.7

21.324.5

33.7

38.8

-

10 B

20 B

30 B

40 B

201920182017201620152014

Total Capital Invested by Deal Value

0-50 50-500 500-1000 MM 1000 MM + Total



By analyzing the volume of deals by deal

value, we see that investors moved to larger

middle-market deals. The lower market ($0-

50MM) has fallen as a % of overall volume

from a high of 61.8% in 2016 to 44.2% in

2019. On the other side, the $50MM-

500MM bracket continued to grow and

made up 37.2% of the total deals, up 4.3%

from 2018. The largest tranche ($1000+MM)

saw a slight decrease, down 1.8% in 2019.

In terms of acquirers, strategic buyers

consistently outpaced PE buyers in the

Packaging sector from 2014 to 2018,

contributing an average of 59.3% of the total

deal volume. In 2019, volume flipped around

in favor of private equity buyers at 53.8% of

total deal volume.

In terms of total capital invested, strategic

buyers continued to lead PE buyers in 2019,

accounting for 61.6%. This was driven in

large part by the merger of Ardagh Group's

Food and Specialty Metal Packaging Division

and Exal Corporation.


53.8%45.4%42.6%34.8%36.4%44.2%

46.2%54.6%57.4%65.2%63.6%55.8%

0%

20%

40%

60%

80%

100%

201920182017201620152014

Deal Volume by Acquirer

Private Equity Strategic

38.4%48.8%42.5%42.4%38.4%33.9%

61.6%51.2%57.5%57.6%61.6%66.1%

0%

20%

40%

60%

80%

100%

201920182017201620152014

Total Capital Invested by Acquirer

Private Equity Strategic

44.2%46.3%55.7%61.8%52.0%

65.9%

37.2%32.9%28.4%25.5%38.0%

22.0%7.0%7.3%6.8%6.9%3.0%3.7% 11.6%13.4%9.1%5.9%7.0%8.5%

0%

20%

40%

60%

80%

100%

201920182017201620152014

Deal Volume by Deal Value

0-50 50-500 500-1000 MM 1000 MM +




Valuation Multiple

Multiple By Acquirer

14.2x

9.9x9.3x

7.3x8.1x

10.7x

8.2x7.6x7.5x

6.5x

1.62x1.41x1.31x0.86x0.99x0.64x1.34x

0.75x0.84x0.89x

0.00x

2.00x

4.00x

6.00x

8.00x

10.00x

12.00x

14.00x

16.00x

2019201820172016201520142013201220112010

Implied EV/ EBITDA Median Implied EV/ Revenue Median

10.8x10.2x

8.5x7.1x7.7x8.5x8.2x

9.4x8.3x

5.7x

24.33x

9.18x9.38x7.79x

16.30x

10.70x

8.19x

4.02x4.76x

7.28x

0.00x

5.00x

10.00x

15.00x

20.00x

25.00x

30.00x

2019201820172016201520142013201220112010

Strategic EV/EBITDA PE EV/EBITDA



Largest Deals

Deal Date Company Name Investor Deal TypeDeal Size

($mm)EV/EBITDA Target Business Description

31-Dec-2019 Power Packaging HCI Equity Partners Add-on - -Provider of Agriculture packaging services to

food and beverage companies

20-Dec-2019 Allied Glass Containers Sun Capital Partners Secondary Buyout - - Manufacturer of luxury glass packaging products

20-Dec-2019Midwest Recycled and Coated

Containerboard Mill

Industrial Opportunity

Partners Corporate Divestiture - -

Manufacturer and distributor of paper products

based in Combined Locks, United States

18-Dec-2019 Everest Flexibles Huhtamäki - 44.94 -Manufacturer of flexible packaging products in

South Africa

16-Dec-2019 Aarts Plastics Berk Partners - - -Manufacturer of plastic packages intended for

the cosmetics, food and pharmacy industries

13-Dec-2019 Grounded Packaging Impact Enterprise Fund - - -Manufacturer of sustainable packaging products

based in New Zealand

11-Dec-2019 Stasher SC Johnson - - -Manufacturer of non-plastic beach and food

bags

05-Dec-2019 CM Packaging Hoffmann Neopac - - -Provider of packaging services based in

Dronten, Netherlands

04-Dec-2019 PoplastGreen Arrow Capital

Management Secondary Buyout 121.47 -

Manufacturer of plastics packaging films and

sheets

02-Dec-2019 Premier Vanguard Endless Add-on 25.78 -Manufacturer of paper rolls based in the United

Kingdom

27-Nov-2019 Apeldoorn Flexible Packaging Altor Equity Partners Add-on - -Manufacturer and distributor of packaging films

and sheets

26-Nov-2019 McNairn Packaging AmerCare Add-on - - Manufacturer of food packaging products

20-Nov-2019 Vitrapack Actera Group Add-on - -Provider of packaging and printing services

based in Wommelgem, Belgium

18-Nov-2019 Chem-Tainer Industries AEA Investors Add-on - -Manufacturer, designer, and developer of

plastic molding products

14-Nov-2019 Blend and Pack Wattle Health Australia - 55.00 - Provider of packaging and distribution services

13-Nov-2019 K+D ÅR Packaging Group Add-on - -Manufacturer of packaging for the

pharmaceutical and cosmetics industry

08-Nov-2019 Shinwoo Samhwa Crown & Closure Corporate Divestiture - -Manufacturer and supplier of plastic containers

and applicators based in Uiwang-si, South Korea

01-Nov-2019 Be Paper Nord Capital Partenaires - 4.98 - Operator of paper and packaging company

01-Nov-2019 Multi-Pack Holdings U.S. Nonwovens Add-on - - Provider of PVA packaging services

31-Oct-2019 Airnov Healthcare Packaging Arsenal Capital Partners Corporate Divestiture 316.08 13.20x Manufacturer of healthcare packaging products

31-Oct-2019 Trivium Packaging Exal Group Add-on 2,500.00 -Provider of metal packaging for consumer

products



Leading M&A Deals

Deal Deal Synopsis Driver

Ardagh Group has entered into an agreement tocombine its Food & Specialty Metal Packagingbusiness with the business of Exal Corporation, aleading producer of aluminum containers, to formTrivium Packaging. This complementarytransaction will combine Food & Specialty’sleading presence in Europe and North America,principally focused on tin-plate steel packaging,with Exal’s leadership in Americas aluminumaerosol packaging.

Global Expansion

Arsenal Capital Partners has acquiredthe healthcare packaging business of Clariant andrebranded the business as Airnov HealthcarePackaging. The transaction looks to furtherdevelop Arsenal’s strong domain and technicalskills in the healthcare, specialty materials, andpackaging sectors to help us create a true globalleader.

Growth

Green Arrow Capital acquired a stake in Poplast,which in turn controls 100% of FM Plastic, in aneffort to consolidate businesses in the flexiblepackaging conversion industry characterised bythe use of recyclable, compostable andinnovative materials. The investment by GreenArrow Private Equity Fund 3, foresees theestablishment of the first Green Packaging centrein Italy.

Synergy Opportunity &

Innovation

Everest Flexibles was acquired by Huhtamäki(HEL: HUH1V) for $44.9 million on December 18,2019. The acquisition will enable Huhtamaki toexpand its flexible packaging manufacturingfootprint into South Africa.

BusinessExpansion



Public Comps: Stock prices slightly trend upwards over last

twelve months into Q4 2019

USD in Millions except per share data

Company Exch Ticker Market Cap Close Price TTM Rev TTM EBITDA

Avery Dennison NYS AVY 10,924 130.82 7,066 425

Berry Global NYS BERY 6,283 47.49 8,878 1,432

Brady Corporation NYS BRC 3,052 57.26 1,154 193

Sonoco NYS SON 6,178 61.72 5,421 692

Sealed Air NYS SEE 6,154 39.83 4,753 677

International Paper NYS IP 18,057 46.05 22,829 3,400

WestRock NYS WRK 11,081 42.91 18,289 3,087

Packaging Corporation of America NYS PKG 10,601 111.99 6,991 1,487

Ball NYS BLL 21,155 64.67 11,558 1,603

Crown Holdings NYS CCK 9,831 72.54 11,608 1,651

Mean 10,332 67.53 9,855 1,465

Median 10,216 59.49 7,972 1,459

High 21,155 130.82 22,829 3,400

Low 3,052 39.83 1,154 193

0.00

20.00

40.00

60.00

80.00

100.00

120.00

140.00

160.00

Jan-19 Feb-19 Mar-19 Apr-19 May-19 Jun-19 Jul-19 Aug-19 Sep-19 Oct-19 Nov-19 Dec-19

Stock Prices

NYSE:AVY NYSE:BERY NYSE:BRC NYSE:SON NYSE:SEE

NYSE:IP NYSE:WRK NYSE:PKG NYSE:BLL NYSE:CCK



Public Comps: EV/Revenue multiples trend upwards throughout

2019, while EV/EBITDA relatively flat over the last twelve months

0.0x

0.5x

1.0x

1.5x

2.0x

2.5x

3.0x

3.5x


EV / Revenue

NYSE:AVY NYSE:BERY NYSE:BRC NYSE:SON NYSE:SEE

NYSE:IP NYSE:WRK NYSE:PKG NYSE:BLL NYSE:CCK

0.0x

5.0x

10.0x

15.0x

20.0x

25.0x


EV / EBITDA



Industry Trends

2020 – 2025: Revenue Continues to Grow

The improved consumer spending over the five yearsto 2019 has supported industry growth. As USconsumption has risen, manufacturers have expandedproduction, thereby increasing the number ofproducts and demand for industry services. ThePackaging Industry in United States was valued at USD183.92 billion in 2019 and is expected to reach USD218.36 billion by 2025, at a CAGR of 4.1% over theforecast period 2020 - 2025.

Digital Printing

2020 could be the beginning of a new decade that isdominated by the digital world. Digital printing utilizescomputer generation as the principal mechanism behinddesigning physical product packaging and creating the imagesor graphics governing their appearance. Digital printing willinfluence every part of today’s packaging and shows no signs ofstopping.

Digital printing allows packagers far more latitude inpersonalization and customizing options than mechanicalprocesses. Additionally, the digital printing technology allowsall colors to be printed in a single pass, which has fostered atrend of “printing on-demand” in the industry. Most packagingcompanies have already switched from analog to digital.

,IBISWorld, Mordor Intelligence, York Saw & Knife

$$218.36

160

180

200

220

240

2020 2021 2022 2023 2024 2025

BIL

LIO

NS,

IN U

SD +15%



Industry Trends

3D Printing Technology

In 2020, one of the most exciting new developments inpackaging manufacturing will come from the evolution of3D printing technology. Manufacturers of 3D printers areworking hard to expand the performance of theirmachines along different dimensions. According toPackaging Digest, they are using 3D printing to makepackaging prototypes, molds to thermo-form parts andprototyping of packaging machine parts. What a 3Dprinter allows companies to do is provide real-timeinnovations to a packaging line at a moment’s notice.

Transparency and Clean Labels

Presenting product information in a clear and transparent wayis another strong packaging industry trend. In today’sworld, where consumers have so much access to information,they can better educate themselves about product choices. Atthe top of smart consumers’ interest list are what their productchoices contain and the packaging methods they use.

Clean and transparent labeling strongly affects the packagingindustry’s food sector. More and more consumers are scanningfood packages with their smartphones to find out exactly whatthey contain. Brands answered the clean and transparent trendin 2020 with the implementation of Smart Label. The labelcode immediately connects consumers to a landing page withtransparent information about how clean this choice maybe. This desire for transparency will likely remain strong in2020 as consumers may be more likely to purchase a newlylaunched food product that has clear product information.

,Forbes, York Saw & Knife



Industry Trends

Sustainable Packaging

The green movement has the momentum to carry itselfthrough 2020 and beyond. Every company that dealswith packaged goods should consider joining the greenwave. It’s all about responsibility through sustainablegoods and environmentally friendly products. The greenscene also involves smaller packaging.

Reduce, reuse and recycle is part of the greencommitment to being responsible in the world. Today’sconsumers are conscious and deliberate about theirenvironmental footprint. More people than ever arejoining the ecological fight and doing their part to protecttheir share of the world. The packaging industry mustrecognize and respect consumers’ desire to maintain asmaller carbon footprint. They can do that by makingsmaller and greener packages.

Flexible Packaging

Flexible packaging continues to gain great popularity.Technological advancement in flexible packaging materialsmakes them suitable to far more consumer products todaythat were once restricted to rigid and hard materials. TheFlexible Packaging Association reports the flexiblepackaging segment accounts for 19% of the total U.S.Packaging market. Flexible packaging takes in all non-rigidmaterials. The most popular flexible packages are wraps, bags,pouches and envelopes.

Part of the reason flexible packaging is such a prominent trendis material advancement. For years, most flexible packagingmaterials were polyvinyl chloride. This plastic wouldn’t breakdown or decompose, which made it environmentally hostile.Today, most flexible packaging uses materials made ofpolyethylene, polyethylene terephthalate or polypropylene.These high-tech plastics are durable when in use butdeteriorate when discarded.

,Forbes, York Saw & Knife, FPA


R.L. Hulett & Company, Inc.

Our Service Offerings

Sell-Side Advisory: Sell your business

Sell your business for the highest price and for the best terms. At R.L Hulett,communicating the value of your business to targeted buyers and finding the best fit foryour team is our forte. We strive to maintain your company’s culture and heritage evenas you transition out of your business.

Buy-Side Advisory: Buy a business

Searching for acquisition targets can be a challenging and time consuming task whentrying to run your own business at the same time. Navigating the risks and pitfalls innegotiating valuation and deal structure can also be a daunting task for many businessowners. Let our team help you minimize your risk and reduce time wasting efforts withour decades of experience in advising in both buy and sell-side M&A transactions. Weutilize industry-leading M&A databases to scout for opportunities and pre-screen for“real” actionable targets so you can stay focused on what matters.

Capital Raise: Gain financial support

With nearly 40 years of experience in middle-market M&A advisory, we know how topackage up your deal and put you in front of the right kind of investors who have thecapital and the industry expertise you need to grow your business. Our team willdevelop a go-to-market strategy and advise on deal structure, valuation, due diligenceand transition issues. Whether you are seeking capital for growth or trying to buy outother shareholders, we have the tools, expertise, and experience to execute a strategicprocess and find the optimal outcome to meet your objectives.



Over the years, R.L. Hulett & Company has completed hundreds of transactions in a wide variety of industries. Pleasenote that this list is not comprehensive. It is common for sellers and/or buyers to request confidentiality regarding theirtransactions, and R.L. Hulett & Company respects such requests as a matter of policy.

Transaction Experience



Our M&A Deal Leaders

Mr. Hulett founded the firm in 1981 and has negotiated and completed more than 200transactions throughout his career. He began his career as a Certified Public Accountantand practiced with Peat, Marwick, Mitchell & Co. in St. Louis as an Audit Manager and inNew York as the Director of Training for Private Business. Mr. Hulett has also served asChief Executive & Board Member for various middle market companies. As an educator, hewas an adjunct professor at New York University and a tenured faculty member atLindenwood University in St. Louis. He conducted training sessions for middle market CPAfirms throughout the country for more than ten years. Mr. Hulett earned his BS/BA CumLaude in Accounting from the University of Missouri-Columbia, and an MBA fromLindenwood University.Robert L. Hulett

Chairman & Managing Director

(314) 721-0607 [email protected]

R. Trevor Hulett, CPAManaging Director


Mr. Hulett has led M&A transactions in a variety of industries includingmanufacturing/industrial, food & beverage, tech-enabled/business services and value-added distribution for over 15 years. Prior to joining the firm, he held senior levelaccounting and financial management positions in both public accounting and largecorporations. Mr. Hulett began his career as a Certified Public Accountant with MPP&W, aSt. Louis-based public accounting firm specializing in middle market companies. He thenheld various management positions in internal audit and corporate accounting with aFortune 1000 industrial manufacturing company and also spent nine years with EnterpriseRent-A-Car Company as a department manager in the Corporate Accounting group. Mr.Hulett holds his Series 62, 63 and 79 securities registration. Mr. Hulett earned a Bachelor’sDegree in Accounting from the University of Missouri, Columbia.

Mr. Vass has over 30 years of business management experience including more than 10years as President of a highly successful consumer products manufacturing company withrevenues exceeding $25 million. During this time, he not only reversed a declining sales andearnings trend, but increased both sales and operating income over 100%. In addition, hehas spent over 20 years at the executive level of Vice President of Sales and BusinessDevelopment. Mr. Vass also has experience in a number of other industry niches including:consumer products, commercial furniture and fixtures and metal recycling. He holds aBachelor’s Degree in Economics from DePauw University and an MBA from the Universityof Michigan.

David T. VassDirector




Industrial Transportation and Logistics Food & Beverage

Business Services Tech-enabled Services Healthcare

About R.L. Hulett & Company

R.L. Hulett & Company is a middle-market investment bank based in St. Louis, Missouri providing financial advisory and M&Aadvisory services to middle market companies. Since its founding in 1981, the firm has advised in over 230 transactions in avariety of industries including manufacturing, distribution, business services, food & beverage, transportation & logistics,health care and tech-enabled services. The firm has an experienced team of M&A advisors consisting of former businessowners, seasoned corporate executives, professional service firm partners, CPAs and MBAs. Our ability to deliver customizedsolutions to meet or exceed our clients’ expectations is what sets us apart from our competitors.

Industry Sectors Covered:

Disclaimer

The data in this document has been derived from PitchBook Data and has been compiled by R.L. Hulett & Company. Thisdocument is strictly for illustrative purposes only. The data presented in this document is not comprehensive and should notbe used for benchmarking, valuation, or for any other decision making. R.L. Hulett & Company accepts no responsibility forloss or damage caused by dependence on the information in this document.

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