Against the backdrop of global economic fluctuations and intensified market competition, the packaging and paper industry is undergoing an unprecedented transformation. A series of recent mergers and acquisitions not only demonstrate the industry giants’ careful consideration in their strategic layout, but also reveal their competitive situation in the global market. This article will take you through these key acquisition cases and understand their profound impact on the future development of the industry.
Recently, the Fosun Group acquired a majority stake in BoingTech. As one of the world's leading manufacturers of RFID inlays and tags, Boing has production bases in China and Malaysia, more than 300 employees, and is expected to have a turnover of approximately US$60 million in 2024. This acquisition further expands the Fosun Group's business in Asia after the acquisition of ArjoWiggins China in January this year. Although market fluctuations in fiscal 2023 led to a 10% drop in revenue, Fosun Group's EBITDA still increased by 8%. The group has 5,500 employees in 28 countries, 73 production plants and cutting and distribution centers, sales in 132 countries, and up to 25,000 product types.
In addition, in the Chinese metal packaging market, both Oregan and Baowu are planning to acquire COFCO Packaging this year. COFCO Packaging's December 2023 annual report showed revenue of 10.26 billion yuan and net profit of 475 million yuan; revenue in 2022 was 10.25 billion yuan.
In the global paper packaging industry, the turmoil is even greater. On April 9, 2024, the European Commission approved the merger proposal between Ireland's Smurfit Kappa Group plc and the US Westrock Company. The merger will create a new holding company, Smurfit WestRock. The new group will be registered in Ireland, with global headquarters in Dublin, North American and South American business headquarters in Atlanta, Georgia, and will be listed on the New York Stock Exchange. Smurfit Kappa and WestRock are the world's leading paper packaging solutions provider and the largest packaging company in the United States, respectively. The merged group is expected to retain secondary listing rights on the London Stock Exchange and will be led by Tony Smurfit, the current CEO of Smurfit Kappa. Smurfit Kappa has more than 350 production bases in 36 countries. Its December 2023 annual report shows that its revenue is 11.27 billion euros and its net profit is 758 million euros; in 2022, its revenue is 12.8 billion euros and its net profit is 944 million euros.
WestRock is one of the largest packaging companies in the United States, with about 58,000 employees worldwide. The company is listed in New York and has about 300 manufacturing plants around the world. Its September 2023 annual report showed that its revenue was US$20.31 billion and its net profit was -US$1.64 billion; while its 2022 annual report was US$21.256 billion and its net profit was US$949 million.
At the beginning of 2024, both International Paper and Mondi expressed interest in DS Smith, triggering a bidding war for DS Smith. In the end, International Paper made a formal acquisition proposal for an all-share transaction on April 16, 2024, with a total value of approximately 5.8 billion pounds (approximately 7.2 billion US dollars), becoming the final buyer. According to the agreement, DS Smith shareholders will receive a portion of International Paper's shares. The transaction is expected to be completed in the fourth quarter of 2024, when DS Smith will become part of International Paper and be listed on the London Stock Exchange. International Paper's 2023 annual report showed revenue of US$18.916 billion and net profit of US$288 million; the 2022 annual report was US$21.161 billion. The company has approximately 40,000 employees worldwide and is one of the world's largest paper product producers. DS Smith, headquartered in the UK, is currently the second largest supplier of corrugated paper products in Europe. It has production plants in 37 different countries around the world and has approximately 31,000 employees. The annual report in April 2024 showed that its revenue was 6.82 billion pounds; the annual revenue in 23 was 8.22 billion pounds.
In addition, in December 2023, Asia Pacific Resources Group, a subsidiary of Indonesia's Golden Eagle Group, acquired approximately 72.61% of Vinda International's shares at a price of HK$23.50 per share, and is expected to complete the mandatory acquisition of Vinda International in August this year, and delisting is a foregone conclusion. From 2021 to 2023, Vinda International's revenue will be 15.27 billion yuan, 17.35 billion yuan, and 18.12 billion yuan, respectively, with revenue growth rates of 13.11%, 3.97%, and 2.99%, respectively; attributable net profits will be 1.34 billion yuan, 631 million yuan, and 229 million yuan, respectively.
On October 23, 2023, Prince Holdings Co., Ltd. announced that it had signed a share purchase agreement with the US investment fund One Equity Partners to acquire all the shares of Walki Holding Oy. Walki has advanced raw material processing technology in the fields of recycling and deplasticization related to packaging and packaging waste regulations. It is expected that this acquisition will further strengthen Prince Holding's competitiveness in the field of environmentally friendly packaging. In 2020, Walki's annual net sales were 355 million euros and the number of employees was approximately 1,000.
Combined with the above mergers and acquisitions of paper packaging giants, let's review the 22-year global list. Paper360 magazine has launched the 2022 annual list of the top 75 global paper companies. There are 22 European companies, accounting for 33.2% of sales; 22 Asian companies, accounting for 20.7% of sales; 20 North American companies, accounting for 36.4% of sales; the merger of companies in the three continents accounts for more than 90% of the global share. According to this list, the four companies mentioned above will directly reduce the top ten by two after the merger, and Essity may fall out of the top ten.
In addition, in the field of glass packaging, Saint-Gobain Group also announced on February 26, 2024 that it had reached a final agreement with CSR Limited to acquire all outstanding shares of CSR Limited for A$9.00 per share in cash. This acquisition provides Saint-Gobain Group with an opportunity to establish a leading position in the Australian construction market and is a decisive step in strengthening its market influence in the Asia-Pacific region.
Looking back at the acquisitions of more than $1 billion in the global packaging industry in the past 10 years, we can see some important transaction cases. On February 19, 2015, Ball acquired Rexam for $6.64 billion. In March 2019, British packaging company RPC Group agreed to the acquisition plan worth 3.34 billion pounds proposed by US plastics manufacturer Berry Global Group. In 2018, Amcor announced the acquisition of all shares of its main US competitor Bemis for $6.8 billion. On February 2, 2022, SIG Combibloc acquired packaging solutions company Scholle IPN for 1.36 billion euros.
Another giant, Sealed Air of the United States, acquired 14 production bases of the Falcordala Group in 6 countries around the world in October 2017. In February 2023, Sealed Air made another move and acquired Liquibox, a leading company in the US flexible packaging industry, for US$1.15 billion. The latter mainly provides sustainable packaging and packaging solutions for fluid and liquid products. Sealed Air's annual report in December 2023 showed that its revenue was US$5.489 billion and its net profit was US$342 million; the annual report in 2022 showed that its revenue was US$5.642 billion.
These mergers and acquisitions not only reflect the strategic layout of major companies in the global market, but also demonstrate their ability to cope with market changes and competitive pressures. The success or failure of these acquisitions will have a profound impact on the future global packaging and paper market. Here we can review the interpretation of the top 10 global packaging companies in a major report by Credit Suisse in 2022.
Certain sub-sectors of the packaging industry, such as beverage cans, have a relatively high degree of global consolidation, with the top three producers controlling 64% of the market. In Europe, North America and Latin America, the top three producers have a higher market share than in Asia, especially China. In the beverage can market, despite a high degree of global consolidation in specific sub-sectors such as beverage cans, the overall market remains fragmented. In addition, in food cans and glass packaging, regional consolidation in North America is very high, with the top two producers accounting for more than 50% of the market. Europe remains fragmented in areas other than metal packaging and glass, which provides opportunities for industry consolidation and growth through acquisitions. The Asian market is currently driven mainly by China and organic growth, but there is still room for consolidation.
According to Smith's estimates, Asia is the largest regional market in the global packaging market, accounting for 43% of global revenue, followed by Europe at 24% and North America (the United States, Canada, Mexico) at 23%, with a compound annual growth rate of 4.1% from 2021 to 2026. Consumer packaging accounts for about 58% of the packaging terminal market, of which food (29%) and beverages (14%) are the two largest application areas for consumer packaging. Industrial and transportation packaging remain the largest areas of use for packaging.
Global Packaging Industry Revenue
By packaging type, global data for 2020 shows that paperboard (corrugated and folding carton) is the largest packaging material, with a market share of 34%, followed by flexible packaging (25%; 18% plastic, 5% paper, 2% foil) and rigid plastic (20%) as well as metal (12%), glass (4%) and others (5%).
However, from the recent mergers and acquisitions, the mergers and acquisitions between flexible packaging, label and paper packaging companies are increasing. Due to the convergence of customers, the boundaries between the packaging market segments have been reduced. Let us look at the changes.
