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Forest, paper and packaging deals insights: 2021 midyear outlook

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What's driving deals in 2021

PwC's Deals Sector Leader John Potter and other partners discuss the deals outlook for the rest of 2021.

Forest, paper and packaging deal value soars to start 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.

Forest, paper and packaging deals outlook


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. 

Key deal drivers

Innovation and transformation

The pandemic not only accelerated the digital economy but also challenged companies in many sectors to be more innovative in how they deliver products and services. New, disruptive business models continue to arise, and digital transformation is critical for competitiveness and to meet new customer expectations. We expect forestry, paper and packaging companies to continue using M&A as a strategy to grow and or expand into sustainable solutions and to acquire new technological capabilities. Such solutions will continue to be highly sought, and cross-sector companies who can bring key capabilities will likely be attractive targets or industry acquirers. 

Geopolitical and regulatory shifts

As expected with the incoming Biden administration, trade tensions have eased. However, several disrupting factors are in play, including continued supply-chain disruption, rising commodity prices such as lumber, fears of inflation and higher corporate taxes and cybersecurity. These headwinds are impacting forest, paper and packaging companies, and we expect vertical integration to continue as a result. These headwinds should continue into 2021, but could start to soften as more countries open, people get back to work and we acclimate to the “new normal.” 

Demand shifts for packaging

COVID-19 disrupted consumer and workforce behaviors as safety grew more important, and the world entered local lockdowns. With people anxious to return to their pre-pandemic lives, we expect certain pandemic trends to continue. The use of e-commerce and home delivery has become a convenient and safe “no-touch” purchasing option for consumers. We don’t see this trend going away, and should increase the demand for quality consumer packaging, flexible, rigid plastics and corrugated shipping and grocery packaging.  

“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.”

— Max Blocker, global forest, paper, and packaging leader

Contact us

Max Blocker

US and Global Forest, Paper and Packaging Leader, PwC US

Harry Gruits

Forest, Paper and Packaging Deals Leader, PwC US

Jason Boyer

Canada Forest, Paper and Packaging Deals Leader, PwC Canada

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