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Steadying the Ship: Packaging Sector M&A Trends in 2024

Gabriel Hansen, Associate, MDN Group

The European packaging sector, like many other global industries, faced multiple moving targets during 2024. However, despite challenges, including elevated interest rates, supply chain disruptions, and economic uncertainty, mergers and acquisitions in the packaging industry demonstrated a measured resilience. 

Though deal volumes remained somewhat subdued, several notable transactions highlighted that both strategic buyers and financial sponsors still see long-term growth potential, especially as companies invest in sustainable technologies and innovative materials.

Changing Markets Require New Approaches

M&A activity in the packaging sector during this period mirrored global caution. 

High inflation, geopolitical tensions, and energy concerns clearly weighed on consumer demand, and while many industrial players struggled with excess inventories, the situation gradually eased, laying groundwork for a potential recovery. 

Although overall transaction volumes reached their second-lowest level in four years, the underlying stability hinted that conditions could improve over the medium term.

A handful of significant deals underscored the sector’s move toward efficiency and consolidation. Proposals like the merger between major industry players demonstrated a push to streamline operations and enhance competitiveness. In parallel, regulatory pressures and shifting customer demands for more eco-friendly materials have prompted companies to find partners who can help them achieve sustainability goals. 

According to Denis Stukalov, Managing Partner at MDN Group, “As environmental standards tighten and consumers expect greener solutions, investors are increasingly looking for targets that blend innovation with responsibility, ensuring a more resilient future for the packaging industry.”

Resilience in Valuations

Valuations, in the form of EBITDA multiples, remained relatively stable. Trading multiples hovered close to transaction multiples, signaling that investors, while cautious, were still prepared to pay fair prices for quality targets. 

The modest dip in valuations appeared less like a retreat and more like a recalibration as companies factored in ongoing supply chain constraints and the long-term investments needed for sustainable solutions.

Strategies and Technological Advancements

Inorganic growth strategies took centre stage as packaging companies invested in automation, advanced manufacturing processes, and digitalization. These upgrades help streamline operations, enhance product quality, and reduce costs. 

The result is an environment where technology sets leaders apart from laggards, positioning more innovative firms as attractive acquisition prospects.

Concurrently, sustainability moved from a nice-to-have to a must-have feature. Governments, environmental advocates, and consumers all demand stronger commitments to eco-friendly practices. Packaging firms responded by seeking partners that can accelerate their shift to sustainable materials or closed-loop supply chains. 

This is no small undertaking, but it represents a differentiator for companies determined to stay ahead. 

“We are seeing a new era in which being environmentally conscious is not just a regulatory requirement, but a strategic imperative,” said Martin Bakker, Partner at MDN Group. “Acquirers are actively looking for businesses that can help them deliver on the promise of sustainable growth.”

Regional Dynamics and Investor Types

Europe remained a key region for M&A activity in 2024. European firms often lead in sustainable innovation, driven by stringent regulations and consumer expectations. This know-how attracted both strategic investors seeking integration synergies and financial sponsors targeting niche innovators. 

While strategic investors continued to dominate activity, financial sponsors also played a crucial role, particularly in backing small-cap targets with strong growth potential. This dynamic reflects the ongoing fragmentation within the industry and the opportunities it presents for targeted consolidation.

Key Growth Areas

The packaging industry’s future growth extends beyond conventional offerings. Companies are focusing on three key areas:

1. Smart Packaging: Technologies like tracking sensors and condition-sensitive labels improve supply chain visibility, reduce waste, and ensure product integrity.
2. Sustainable Packaging: Eco-friendly materials, reduced plastic usage, and improved recyclability have become vital. Long-term success will hinge on meeting the high bar set by European regulations and consumer activism.
3. E-Commerce Packaging: With online retail firmly established, the need for packaging that balances durability, branding, and environmental responsibility is crucial.

As these trends accelerate, companies that can stand out through innovation, sustainability, and technological excellence will likely command attractive valuations and secure new capital partners.

Looking Ahead

While 2024 was cautious, there are signs the pace of M&A in the packaging sector may pick up. As interest rates stabilize, supply chains normalize, and sustainability becomes integral to corporate strategies, investors could find conditions more conducive to dealmaking. 

For European stakeholders, this presents both a challenge and an opportunity. Careful navigation will be required to ensure valuations and deal structures reflect current realities while positioning businesses for the future.

In conclusion, the packaging M&A landscape so far this year has been shaped by resilience, strategic adaptation, and a growing emphasis on sustainability. European firms, at the forefront of greener and smarter packaging solutions, are poised to meet evolving demands. The careful blending of technology, environmental stewardship, and market insight sets the tone for a more secure and forward-looking industry environment.