2024 is ending with multiple multibillion-dollar business combinations across the packaging industry, including announcements in the last several weeks that Amcor is buying Berry Global in a transaction valued at $8.4 billion and Novolex plans to take Pactiv Evergreen private in a deal worth $6.7 billion.
These plastic and food service packaging-focused deals were also preceded by recently completed deals in paper and metal packaging, including Smurfit Kappa’s acquisition of WestRock and Sonoco’s acquisition of Eviosys. And like Amcor and Novolex’s deals, International Paper’s takeover of DS Smith is expected to close in 2025.
On Wednesday morning, BofA Securities research analysts upgraded the rating for Amcor from “underperform” to “buy.” Despite some concerns about how successfully future cross-selling with Berry could play out, they said in a note to investors that Amcor’s projected $650 million in synergies may be conservative by a range of $50 million to more than $100 million, and they don’t see significant risks to the deal being approved.
Reflecting on Novolex’s acquisition, Baird analysts wrote to investors Monday that “after a lull in activity, the Packaging industry is in the initial stages of a long-tailed consolidation cycle, which while thus far is in the plastics packaging substrate, is likely to be broad-based.”
Investment bankers and research analysts see the recent activity as a signal that packaging M&A may be ramping up again after a lower-volume period for deals, particularly in the United States. Mike Schumacher, managing director with Capstone Partners, noted that even with “some eye-popping big deals,” 2024’s year-to-date activity level is quite low when compared with previous years.
In a November 2024 packaging M&A report, Capstone reported a roughly 20% year-over-year decrease in deal announcements in the sector, when looking at deal counts as of mid-October — tracking 169 in 2023 and 135 in 2024. This marks a decline from full-year totals of 253 in 2021, 213 in 2022 and 209 in 2023, based on data aggregated from Capstone, Capital IQ, FactSet and PitchBook.
This year’s volumes were “upheld by businesses’ realignment of portfolios,” including major companies making divestitures to streamline focus on core competencies. “In the face of less overall M&A activity, large deals have [taken] center stage by and between major Packaging industry players,” the firm reported.
Trends in deal values are harder to track because smaller companies don’t always disclose transaction details.
Investment bank PMCF recently reported that October was the strongest month of 2024 for global plastics M&A, with 48 deals — the highest monthly volume since December 2021.
Simultaneously, global packaging M&A “notched a very strong month,” PMCF said, with 43 deals representing both month-to-month and year-over-year volume growth. “Strategic buyers drove activity in the month, which reflected pent up demand that carried over after a weaker Q3,” PMCF wrote of global packaging M&A. “Generally, October marked a strong start to Q4 and represents positive momentum heading into the end of the year.”
Chuck Walter, a director in Harris Williams’ industrials group, echoed that by saying that even with all of 2024’s headline-making deals, packaging M&A volumes remain below long-term averages. But in his view, the packaging M&A market appears to be accelerating, not just through those megadeals but in the form of divestitures, private equity investments and other deal types, he said.
“While these combinations are major news for the industry, there is still significant fragmentation within the packaging landscape and, as a result, plenty of runway for continued growth via M&A,” Walter wrote via email. “And, as those major players gain scale, their ongoing role as important strategic acquirers will only increase.”
