Portfolio Realignment, Sustainability Remain Top of Mind for Packaging M&A

oncluded that it offers few synergies with the rest of our portfolio, and is not core to our Packaging Sector’s growth strategy,” said Thomas Morin, President and Chief Executive Officer of TC Transcontinental.

Packaging Strategies has reported extensively on M&A activity in recent months, including the planned merger of Amcor and Berry and the combination of Quadpack and PSB subsidiary Texen into a single group. A comprehensive overview of Packaging Strategies’ reporting on packaging M&A can be found here.

Capstone notes that Extended Producer Responsibility (EPR) in the packaging sector has become an increasingly important component of sustainability initiatives worldwide. Stakeholders have determined that producers have a responsibility for the treatment and disposal of post-consumer products, and the U.S. government has plans to enforce regulations in 2025. Manufacturers in the packaging market have toggled back and forth with the expectation of managing the end-of-life impact of the packaging materials they produce. This has often involved funding recycling programs, redesigning packaging for greater recyclability, or reducing the amount of packaging used, among other initiatives, with the aim of minimizing what ends up in landfills and as harmful pollution.

Packaging players have also begun adapting production strategies in response to changing trade policies and tariffs. Of note, Canada has aligned its tariff structures with the U.S. for certain goods, and companies have gradually looked toward Mexico as an alternative country for production. Trade agreements, including the U.S.-Mexico-Canada Agreement (USMCA), have provided a favorable option for North American production that avoids trade disruptions and geopolitics stemming from overseas manufacturing.

Capstone Managing Director Mike Schumacher, the lead contributor in the newly released report, stated: “Now that we are past most of the impacts from the pandemic, and the experienced spike in demand for packaging products related to e-commerce activity, the sector has normalized with less destocking activity and pricing stabilization within the commodity input markets. This has led to more confidence from the buyer community when analyzing potential targets for factors such as recent company performance, margin sustainability, and go-forward predictability of revenue and profitability.” He also added that “This confidence, coupled with continued innovation in packaging sustainability and an anticipated increase in overall M&A activity going forward, will lead to strength in packaging M&A and robust interest from private equity groups and strategic buyers.”

The report also delves into how packaging M&A has fared as regulators place heightened attention on the responsibility of producers for the treatment and disposal of post-consumer products, leading to significant investments in the sector. It discusses why major players have reevaluated portfolios in order to streamline operations and focus on core competencies, divesting business units as a result. Additionally, insights from Capstone’s recent client, Harbor Foam, are also included in the report.

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