State of the Industry: Global Consolidation in Packaging

While global consolidation and the fragmented industry structure have contributed to the rapid expansion of the packaging M&A market for the past few years, the rise of private equity and the evolution of debt capital markets is beginning to have a significant impact on the packaging sector as well. Since 2003, uninvested "dry powder" in the hands of private equity firms has risen from $20 billion to nearly $500 billion, with 90 percent of the increase occurring in the past five years. This increase represents an estimated purchasing power of $1.5 to $2 trillion in enterprise value; enough to finance Rank Group's recent purchase of Pactiv nearly 200 times. With this level of capital available, even the largest packaging companies should expect to be put "under the microscope."