BMO Capital Markets Report Reviews Mergers and Acquisition Activity in the Packaging Industry



    CHICAGO, Jan. 6 /CNW/ - BMO Capital Markets, the investment and corporate
banking arm of BMO Financial Group (NYSE, TSX: BMO), has released its third
annual report on packaging M&A activity, entitled Mergers and Acquisitions in
the Packaging Industry: 2008 Annual Deal Review.
    The report provides a comprehensive review of M&A in the packaging
industry in North America as well as on a global basis over the last several
years. The report provides an overview of reported M&A activity in 2008,
examines M&A activity by sector, geography, acquirer type, size, and
valuations, and provides a brief synopsis of each transaction announced during
the year. In addition, the report examines packaging M&A trends over the last
several years.
    "The last year has been a challenging year for M&A activity in the
packaging industry in terms of deal volume, valuations, and interest among all
types of acquirers," said Doug Lawson, Managing Director and Head of the BMO
Capital Markets packaging practice.
    "After a record setting year in 2007, the M&A environment was affected by
challenging market conditions in 2008. The credit crisis and a difficult
economic environment combined with unprecedented spikes in resin, oil and
paperboard prices resulted in a significant slowdown in packaging M&A
activity," Lawson added. "While we expect the challenging conditions to
persist in 2009, we believe that packaging industry fundamentals remain
attractive over the medium-to-long term and the strong rationale for
consolidation in the packaging sector continues to exist."

    
    Highlights of recent M&A activity in the packaging sector which are
reviewed in the report include:

    -   Global M&A volume declined after five consecutive years of increasing
        activity

           In 2008, there were 252 announced transactions worldwide, which
           represent a decrease of 35% from the 386 announced deals in 2007
           and the lowest level in the past ten years.

    -   M&A Activity Weakened Across All Regions of the World

           Europe and North America continued to remain as the two largest
           regions for deal activity worldwide, with 38% and 34% of deals in
           2008, respectively. However, year-over-year, transaction volume
           fell off across all regions worldwide in 2008. While North America
           was the second most active region worldwide with 34% of total
           global deals, North America experienced the largest drop, with 56
           fewer transactions in 2008 (86 transactions) than 2007 (142
           transactions).

    -   All Sectors Were Affected by Market Conditions in 2008

           In 2008, the number of deals in the packaging industry was
           relatively evenly dispersed between the rigid (29%),
           paperboard (24%), and flexible (23%) sectors. The remainder of
           activity was split between labels, machinery, and other packaging.
           While M&A activity slowed across all sectors, flexible packaging
           had the most significant slow-down on a nominal basis. Packaging
           machinery was least affected with only 18% less transactions in
           2008 than 2007.

    -   Announced Packaging Deal Value Was Down Year-Over-Year

           The aggregate value for packaging transactions with reported
           values in 2008 was $14.9 billion for the 88 transactions (35% of
           all deals) with reported values as compared to $32.6 billion in
           2007 for the 137 transactions (35% of all deals) with reported
           values. The median reported transaction value in 2008 was
           $17.3 million versus $35.1 million in 2007 and $21.0 million
           in 2006.

    -   Strategic Acquirers Continued to Account for the Majority of
        Transaction Volume

           Strategic acquirers continued to lead M&A volume in the packaging
           industry, with 166 transactions or 66% of announced deals in 2008
           (versus 255 deals in 2007 or 66% of announced volume). Private
           companies made more acquisitions in 2008 (94) than public
           companies (72); while in 2007, public companies had been more
           active than private companies. Private equity firms and their
           portfolio companies accounted for the remaining 86 deals or 34% of
           transactions.

    -   A Variety of Restructuring-Related Transactions Were Announced

           In the second half of 2008, several restructuring-related
           acquisitions were announced as heavy debt levels were aggravated
           by the challenging economic and financing environment combined
           with high commodity prices.

    About the BMO Capital Markets Packaging Group
    

    The BMO Capital Markets Packaging Group has substantial transaction
experience across the broad spectrum of the packaging industry. The group has
led numerous M&A and financing transactions of packaging companies. The team
has significant experience in representing public, private and private-equity
owned companies across a variety of packaging sub-sectors, including Rigid,
Flexible, Paperboard, Labels, Contract Packaging and Packaging Machinery.
    To request a copy of the Mergers & Acquisitions in the Packaging
Industry: Annual Deal Review or to subscribe to The Converter, a monthly BMO
newsletter which reports on the activities and trends shaping this industry,
please visit www.bmocm.com/industry/packaging or send an email to Doug Lawson
at doug.lawson@bmo.com or Laura Hubbard at laura.hubbard@bmo.com.

    About BMO Capital Markets

    BMO Capital Markets is a leading full-service North American financial
services provider, with over 2,000 employees operating in 14 North American
offices and 26 worldwide, offering corporate, institutional and government
clients access to a complete range of investment and corporate banking
products and services. BMO Capital Markets is a member of BMO Financial Group
(NYSE, TSX: BMO), one of the largest diversified financial services providers
in North America with more than US$416 billion total assets and more than
37,000 employees as at October 31, 2008.





For further information:

For further information: or media interviews with one of our Packaging
Group experts please contact Orli Namian, BMO Financial Group,
orli.namian@bmo.com, (416) 867-3996

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