2018 and the year of the big deals - The Noel D'Cunha Sunday Column

Top deals of 2018
The initial months of 2018 encountered a striking deal when International Finance Corporation, the private-sector investment arm of the World Bank, proposed to invest up to USD 5-million (around Rs 32-crore) in Bizongo, an online business-to-business marketplace for packaging materials. Bizongo raised a total of USD22 million (Rs 146.7-crore) in a series B funding which was led by global technology fund, B Capital and IFC.

IFC says, “Many SMEs in this sector lack professional expertise to market and distribute products, leading to low (less than 50%) capacity utilisation. Bizongo is able to provide incremental demand and process know-how which has led some suppliers to increase capacity utilisation, significantly improving efficiency,”

Another major that transpired in March, was Constantia becoming India’s third largest flexible packaging company after its Creative acquisition.

Before the merger, Creative Polypack was India’s fourth largest flexible packaging group involved in manufacturing film-based flexible packaging for the food and home and personal care industries, as well as paper-based soap wrappers.

Hutahmaki PPL was involved in two deals this year. Firstly, the news that Hutahmaki and Amcor are in negotiations with the promoters of Essel to buy a controlling stake in the company.

And secondly, Huhtamaki PPL’s acquisition of Ajanta Packaging in a bid to strengthen its label business. According to Huhtamaki, the transaction was a slump sale, at an enterprise valuation of Rs 100.3-crore, on “a cash-free, debt-free basis.”

The second half of 2018, saw PE firm Advent acquiring Manjushree Technopack. The private equity firm Advent International had invested in Bengaluru-based Manjushree Technopack in partnership with the founding Kedia family. As part of the transaction, Advent had purchased all the shares owned by Kedaara Capital and a portion of the Kedia family’s stake in Manjushree Technopack. The Manjushree deal is valued at Rs 2,400-crores.

Another boost towards India’s packaging presence arose when divesting its BOPP films business, the Italian investor M&C, owner of Treofan Holdings sold its controlling stake in Treofan Europe to Jindal Films. The legally binding agreement was signed on 6 August and the transaction is expected to be closed before the end of the first quarter of 2019, subject to regulatory approval and closure procedures.

In the month of August, we witnessed possibly, the most crucial international packaging deal of the year when Australia’s packaging major Amcor announced that it will acquire US-based Bemis Company in a USD 6.8 billion deal, expecting to create combined revenues of USD 13-billion and EBITDA of USD 2.2-billion. 

In the all-stock cash-free transaction, the agreed distribution will be at a fixed exchange ratio of 5.1 Amcor shares for each Bemis share. Hence, Amcor shareholders will own 71% of the combined company and Bemis shareholders will own 29%.

Amcor announced to acquire US-based Bemis Company in a USD 6.8 billion deal

Amcor's CEO, Ron Delia, says, “The strategic rationale for this combination and the financial benefits are highly compelling for both Amcor and Bemis shareholders. We are convinced this is the right deal at the right time for both companies, and with the right structure for both sets of shareholders to participate in a unique value creation opportunity. Amcor identified flexible packaging in the Americas as a key growth priority and this transaction delivers a step change in that region".

The combination will be effected through a merger of Amcor and Bemis into a newly created holding company to be known as New Amcor as it is incorporated in Jersey. New Amcor will have a primary listing on the New York stock exchange (NYSE) and a listing on the Australian securities exchange (ASX).

New Amcor will continue to support the communities in which Bemis operates and announced on 6 August 2018, that a contribution of USD 35,000 will be provided to the Bemis Foundation on behalf of Amcor’s 35,000 employees worldwide.

Coming to the printing side, Heidelberg taking over the MBO Group in a bid to expand its offerings in the post-press market for digitally printed products was quite eye-catching.

MBO’s operations account for a sales volume of around 50-million pounds and among other things will see Heidelberg take over the sites in Oppenweiler and Bielefeld, Germany, and the production site in Perifita, Portugal, which employs a total staff of 450.

MBO’s operations account for a sales volume of around 50-million pounds

“Even when post-press operations are running efficiently, there is still huge potential for boosting productivity throughout the entire print shop,” claims Stephan Plenz, member of the management board responsible for digital technology. “The takeover is another important step in offering our customers a comprehensive portfolio that generates value and covers everything from technology and consumables right through to service.”

The publication side is getting even more compacted with the announcement that Quad/Graphics and LSC Communications approved a definitive agreement in which Quad/Graphics will acquire LSC Communications in an all-stock transaction valued at approximately USD 1.4-bn. As of 30 September 2018, the combined company had an annual revenue of approximately USD 8 billion. The transaction is expected to close in mid-2019.

There has been a lot of action in the agency space, too.

First-party data is what people are talking about now, and that’s exactly what IPG says it has secured with its whopping US$D 2.3-billion acquisition of Acxiom Marketing Services. For that enormous sum, IPG gets 1,600 data specialists and its data management services. This means big things for the network globally, including Asia-Pacific. China will likely be a priority in this part of the world.

Sir Martin Sorrell’s second innings in advertising, post his exit from WPP has taken off with the takeover of S4 Capital. Clearly a man on a mission to build a newer, supposedly better WPP advertising firm, Sorrell captured digital agency MediaMonks, which WPP was desperately keen on securing for itself. Having just announced a USD 150-million takeover of MightyHive, a programmatic marketing services agency, industry pundits say it will have implications for APAC. Since all the action is in China, India and Japan.

Plus there were the re-organisation of the agencies which led to new avataars.

Walter Thompson + Wunderman = Wunder Thompson.

Y&R + VML = VMLY&R (yes, really).

Then there is Burson Marsteller + Cohn & Wolfe = Burson Cohn & Wolfe.

Add to that a recent total restructure at Ogilvy, the spinning off of Kantar.

Ad tech firms had an extremely busy 2018, globally and within Asia-Pacific, both acquiring and being acquired.

One of the biggest deals was US telecom giant AT&T’s reported USD 1.6-billion acquisition of AppNexus.

Similarly, Australia’s Trimantium GrowthOps bought Singapore-based Asia Pacific Digital (APD) to expand its Asia presence and add APD’s ad tech skills to its arsenal.

The list continues – in August Singtel-owned ad tech platform, Amobee completed its purchase of New York-based Videology, a notable merger given it’s an Asian tech company acquiring a US one. Rounding off the merger fever are another east-to-west acquisition: India’s InMobi buying Pinsight Media, the mobile data and advertising subsidiary of US telco Sprint, and Integral Ad Science selling a majority stake to Vista Equity Partners.

And finally, Dentsu Aegis re-opened the coffers in a big way in 2018. According to R3, while the agency may not have broken the billion-dollar mark, it spent USD 684 -million on a mammoth 23 deals. Yes, you read it right, 23 deals.

It's a busy season if you have the bucks; or you are keen to double or triple it.

(With inputs from Abhishek Murlidharan, editorial assistant, PrintWeek India and WhatPackaging? who collected the data)