European corrugated paper industry to enter consolidation period


Dutch multinational banking and financial services company Rabobank stated that the European corrugated packaging industry that comprises multiple players is expected to enter a consolidation period.

The highly fragmented market has witnessed 109 merger and acquisition deals in the last seven years.

Smurfit Kappa, DS Smith and Mondi were the most active acquirers, while some smaller privately owned players were also active to expand their portfolio.

The bank also expects that large companies, such as Smurfit Kappa and DS Smith, will look to expand their opportunities overseas beyond traditional markets.

However, after several transactions, no clear market leader has emerged and the European containerboard and corrugated markets continue to remain fragmented, Rabobank stated.

"We believe that the European corrugated packaging industry is facing interesting and dynamic times."

As the level of vertical integration continues to remain low, there is ample scope of further consolidation in the industry.

Rabobank F&A Supply Chain Analyst Natasha Valeeva said: “All in all, we believe that the European corrugated packaging industry is facing interesting and dynamic times.

“European companies are not sitting back and waiting for things to happen. Most are actively looking for ways to achieve growth, competitive advantage and increased margins, among others via acquiring valuable assets.”

Rabobank estimates that consolidation will continue in the European packaging market, which is expected to evolve in the next ten to 20 years with the current US market structure.

However, the banking company also opines that the change may not be as rapid as it is in the US, because many of the prominent companies in the Europe are family-owned businesses who are not ready to divest their interests.

Several European producers will continue to look for avenues to invest in the US market.

Rabobank provides financial services to more than 60 leading companies operating in the global packaging industry, reported Packagingeurope.com.