PwC's Deals Sector Leader John Potter and other partners discuss the deals outlook for the rest of 2021.
Despite continued disruption and uncertainty stemming from the COVID-19 pandemic, global M&A has seen a strong resurgence in the first half of 2021, driven by a historic first quarter of 2021 in global M&A activity. The forestry, paper and packaging sector — which includes fiber and non-fiber based materials — experienced its best six months in 2021 over the last two years with deal value hitting $18.5 billion. This was driven by the acquisition of Ardagh Metal Packaging by Gores Holdings V Inc., valued at $8.5 billion, which contributed to the $14.6 billion increase from the first half of 2020. This was the first megadeal for the sector (greater than $5 billion) in two years.
Deal volumes, however, remained low at 149, compared to 1H 2020. However, average value per deal increased significantly. North America and Asia dominated M&A activity making up eight of the top ten deals. As we look ahead, we expect continued emphasis on innovation, supply-chain optimization and sustainability as dealmakers craft growth strategies.
As markets and countries start to reopen and people return to work, we are optimistic about M&A activity. High levels of available cash on both corporate balance sheets and in private equity funds, the low cost of debt and continued focus on portfolio rationalization stoke optimism for M&A. Buyer pools could grow as companies who couldn’t — or wouldn’t — do deals in a virtual world, may have to do so just to keep pace. Sustainable solutions, innovation and supply-chain optimization will likely continue as dominant themes in the coming year. M&A opportunities have significantly evolved over the past year which will also likely continue. Forestry, paper and packaging companies must continue adapting as the world emerges from the pandemic.
“Companies have shown they can adapt their business to a pandemic world. As the light at the end of the pandemic tunnel is getting brighter, we are optimistic about M&A activity moving forward.”
Forest, Paper and Packaging Deals Leader, PwC US
Canada Forest, Paper and Packaging Deals Leader, PwC Canada