Barry Twigg, Chairman of National Flexible was given the sobriquet ‘First Man of Film’. Here he reviews 2016 M&A Activity in Flexibles.
Times they are a Changing. When Bob Dylan wrote these prophetic words in 1964 he could well have been referring to the flexible packaging market in 2016, for this has truly been a year of monumental changes in the structure and ownership of many of the most familiar names in the flexibles market.
Whilst M&A in flexible packaging is not a new phenomenon, indeed since Amcor acquired Alcan in 2010 there has been an inexorable move towards larger and larger companies within the sector but 2016 is undoubtedly the stand out year for momentum in this trend.
Not only are some of the industry’s most well-known names disappearing, but the spread of nationalities acquiring companies is growing year by year. When the Alcan takeover occurred there were a handful of overseas owners, Amcor which is Australian by birth and Printpack (Pulse) who with the likes of Sealed Air and Bemis who were American. However, since that time we have seen an acquisition surge from various nationalities including Irish, French and Spanish with 3 more American multi-nationals. The consequence is we now have the UK Flexible Packaging market dominated by large overseas companies.
It’s difficult to understand why the UK flexible market attracts so much international investment, but it is apparent, that the attraction continues to grow. Which brings us back to 2016, a year when Coveris from the USA which had already acquired Britton and Paragon in the UK added Learoyd Packaging to their portfolio. In addition, Americk from Ireland, who had previously purchased Webtech and Primopost acquired PP Global. Meanwhile Arteb, the St Helens based converter, was purchased by the French Group UNI Packaging. Interestingly Americk itself is now subject to a takeover by the Spanish company SAICA, a mega paper re-cycling company. Whilst in the labels sector AJS Labels has been acquired by MPS another USA multinational corporation, and so it goes on.
In the UK we had the £260m acquisition of BPI by RPC and on a smaller scale QC Packaging in Derby sold to Terinex the UK polyester convertor.
Whilst this is a truly remarkable list of acquisitions to all occur all in one year, it is obvious that this M&A process is ongoing, for currently Linpac, itself a multinational is up for sale, presumably to the highest bidder.
Trying to find some commonality in all this activity (other than its international scale) is difficult. Without doubt much of it is about product diversification e.g. label companies developing into printed film conversion, bag companies diversifying into the wider flexibles market and companies in rigid plastics such as RPC extending into an aligned activity. Virtually the one thing all the acquired companies have in common (apart from cheap money for acquisitions) is they predominantly supply the UK food industry which being dominated by the supermarkets, is hardly likely to produce mega profit margins. However, presumably, each acquiring company feels they can improve in this area.
So where does all this leave the flexibles market? Inevitably, these developments result in buyers having less choice of supplier. In addition, as many independent disappear to become part of these major groups, there will undoubtedly be an increasing loss of flexibility and control by local management.
However, here at National Flexible we believe these changes present us with major selling opportunities. As we are owned by our management and staff we are flexible and encouragingly our latest 2016 survey shows 99% existing customer satisfaction. National Flexible has a product range to match even the largest competitor and a modern film converting facility second to none. We also guarantee 100% deliveries OTIF or we provide a refund on the order value. We currently have the UKs largest customer stock/sales ratio and a team of people who genuinely care for their customers’ wellbeing.
So we view 2017 with a high degree of confidence with no intention of being acquired!
Tel: 01274 685 566