M&A All the Way

If merger and acquisition (M&A) activity is an indication of the state of the economic environment, then we have one more indication that the economy is bouncing back. This issue contains news items on Repacorp's acquisition of Aladdin Label; PaperWorks Industries acquisition of Rosmar Packaging; Mid Oaks Investments purchase of Plastic Packaging Technologies; Danaher and EskoArtwork; Comexi Group acquiring ACOM; Transilwrap and Interfilm Holdings; and the one that captured national headlines for its scale, RockTenn's intention to acquire Smurfit-Stone.

Mesirow Financial, a financial services firm, notes a direct connection between M&A and the state of the economy. In its recent "Packaging Perspectives" newsletter, the feature report, "2010: Year-End Review," says: "The M&A marketplace is closely linked to the state of the overall economy, as it influences the confidence and attitude of M&A decision-makers."

It goes on to note several favorable macro-economic factors that are contributing to an up-tick in M&A. These include record low interest rates, enhanced credit availability, and healthy equity markets highlighted by increasing stock prices and improving public equity valuations. Public companies realize the need to improve profitability to justify the higher share prices. "This dynamic can contribute to higher transaction activity as public acquirers use M&A as a strategy to grow revenue, realize synergies, enter new markets, expand market share, and generally enhance their business models," states the report.

Recessions are economic shake-down periods, and this last one shook us to the core. During these periods, weak companies disappear and many strong companies become stronger. For the bulk of the companies in between, different opportunities arise to improve a company for the longer term, including M&A. In these cases, both acquiring and acquired companies go into the transaction to do what's best for their particular company. This can be seen in a statement by Donnie Thompson, former president of Interfilm: "Transilwrap is a highly respected leader in the industry. This acquisition will provide valuable resources allowing Interfilm and Brushfoil to expand their market reach and offer customers increased converting services and more diverse product lines."

The March issue of packagePRINTING will again include our annual State of the Industry Report. Blaige & Company—a company whose core strength is M&A advisory services for plastics, packaging, and chemicals—will provide an overview of economic conditions impacting the packaging industry in the coming year. With the economy continuing to be a dominant "topic of conversation," perspectives from companies with their pulses on the industry can be a valuable source of information.

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