Mid-Year Packaging Financial Review

Published: September 09, 2008

CHICAGO, IL | Mesirow Financial’s William J. Hornell, managing director, delivers his 2008 mid-year review in the company’s “Packaging Perspectives” newsletter. Hornell observes, “What a difference a year makes.” Terms such as credit crunch, sub-prime mortgages, or collateralized loan obligations now are in the financial spotlight and have impacted significantly the stock market, interest rate environment, and the merger and acquisition marketplace.

“In the first six months of 2008, overall US M&A deal volume dropped by 42% versus the same period in 2007. A good portion of that drop was due to a remarkable 85% drop in US private equity deal volume during the same time period,” Hornell says. What may have “turbo-charged the large private equity firms last year,” in the days of easy credit, is definitely gone now. Hornell remarks the monetary rocket fuel previously provided by the now struggling commercial and investment banks is being withheld to shrink their balance sheets and improve their capital positions.

Like the broader economy, packaging deal volume fell 24% from $15,006 million in the first of half of 2007 to $11,390 million in the first half of 2008. International Paper’s $6-billion acquisition of Weyerhaeuser’s containerboard, packaging, and recycling business tended to soften the drop. Hornell notes that despite market uncertainty for 2008, however, there still have been several large paper and packaging deals throughout the first half of the year.

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