Billion dollar mergers in packaging
Mega billion-dollar mergers seem to be the theme of the day. And the big jaw-dropper has been Rock-Tenn Company (RockTenn) and MeadWestvaco Corporation (MWV) entering into a combination agreement to create a leading global provider of consumer and corrugated packaging (NewCo). The combined equity value of NewCo will be USD 16 billion.
11 Mar 2015 | 592 Views | By PrintWeek India
RockTenn is one of North America's leading providers of packaging solutions and manufacturers of container board and paperboard. The company operates locations in the US, Canada, Mexico, Chile and Argentina.
MeadWestvaco Corporation is a global packaging company providing innovative solutions to the world’s leading brands in the healthcare, beauty and personal care, food, beverage, home and garden, tobacco, and agricultural industries.
Only last year, MeadWestvaco Corporation, signed a Rs 1000-cr Memorandum of Understanding (MOU) with the Gujarat Government.
This investment will expand MWV’s presence in industrial packaging and triple its sales in India. The MOU also supports around 800 employment opportunities in the Indian packaging industry.
The MOU establishes MWV’s investment of Rs 1000-crore over a period of three to five years in the packaging and paperboard industry in India. This investment includes the purchase of Vapi-based Ruby Macons, as well as additional plans to significantly expand the current production at the facility with the installation of a new paper machine that will manufacture new paperboard products and grades. The investment and expansion plan is already underway and should yield significant increases in production starting in the current year.
Meanwhile, Huhtamaki completed the deal to acquire Positive Packaging Industries. In mid 2014, as reported in PrintWeek India, the Finland-based Huhtamaki, global manufacturer of consumer and specialty packaging, entered into an agreement to acquire Positive Packaging Industries for a Rs 2009 crore.
| Top ten packaging players |
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International Paper is the largest player with USD23.5 billion in sales.
RockTenn is the fifth-largest packaging company with USD9.9 billion in sales.
Ball, Broomfield, CO, is the eighth-largest player with USD8.5bn in sales.
Rexam is the 11th largest player with USD5.6 billion in sales.
MWV is the 14th largest player with USD5.6 billion in sales.
Once the above mergers are completed, Stora Enso will drop to fourth position while Amcor will be in fifth position in the packaging field.
Smurfit Kappa, Crown Cork, Sealed Air, Mondi and Owens Illinois retain their positions in the top 10.
DS Smith, Packaging Corporation of America, Bemis, Sonoco, Tetra Pak and Graphic Packaging are the other top players in the packaging field.
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The Positive Packaging with mother plants in Khopoli - and an annual turnover of Rs 1000 crores, is a privately owned flexible packaging company with nine manufacturing facilities in India and the UAE as well as business in Africa and other export markets.
With the acquisition, Huhtamaki will expand its flexible packaging manufacturing into Middle East and expects to double its sales in Africa. Positive Packaging will become part of Huhtamaki's Flexible Packaging business segment.
And finally Ball has acquired Rexam, thereby creating global packaging companies that, once their respective deals are completed, will be the second- and third-largest packaging companies in the world.
Speaking to PrintWeek India, Craig Jones, sector director Rexam AMEA announced that the firm has obtained land in Sri City, Andhra Pradesh and Mahindra World City, Jaipur in order to build beverage can factories that cater to the growth in can consumption which is being driven by the Indian beer and soft drink market.
The plant in Sri City represents an initial investment of close to 50 million pounds (approximately Rs 479 crore) and will add a total production capacity of 800 million cans.
The UK firm entered the Indian market in 2007 with a beverage can plant in Navi Mumbai by partnering with Hindustan Tin Works.
According to N C Saha of Indian Institute of Packaging, "The Indian packaging industry is a fragmented business in India with a turnover of USD 24.1bn in size. With the global consolidations, it is likely that the ramifications will be felt in India."
| Deals at a glance |
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Ball is buying Rexam outright, a big player in the beverage can market.
MWV and RockTenn will be equally split between consumer and corrugated packaging.
MWV and RockTenn will become NewCo.
NewCo will be the second-largest player in the fields of consumer and corrugated packaging, behind International Paper.
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