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‘UK Single Use Plastics!’ Would You Buy into this Business?

‘UK Single Use Plastics!’ Would You Buy into this Business? 

What is it that is so attractive about the UK’s Flexible Packaging companies to overseas predators, as yet another enters the market with no less than four significant company acquisitions in the last 12 months?

The purchase of Ultimate, by American venture capitalists ProAmpac, adds to their ‘buying spree’ which has included the purchasing of IG Industries, Brayford Plastics, Rapid Action Packaging (RAP), all in the last 12 months. Thus, ProAmpac join the other five major multi-national groups that have entered the UK convertor market since Amcor bought the Alcan Packaging business in 2010. As a consequence, in just 10 years, the UK Flexible Packaging Industry has been transformed as follows;

Company Base Sites Employees Sales
Amcor Australia 195 sites 33,000 employees $9.3 billion sales
Berry Global American 130 sites 24,000 employees $7.9 billion sales
Mondi South African 100 sites 26,000 employees $7.5 billion sales
Saica Spain 10 countries 10,000 employees $4.1 billion sales
Coveris American 66 sites 4,500 employees $1.0 billion sales
Schur Austrian 4 countries 1,000 employees $500 million sales

We can now add to this list

ProAmpac   American      50 sites       5,800 employee  $1.5 billion sales

The 4 companies bought by ProAmpac can be added to the 33 others which have disappeared as they have either been bought by these multi-nationals and ‘rationalised’ out of existence, or, simply gone bankrupt. (A full list of these companies is available on our website). It will be interesting to see if ProAmpac continue this trend.

ProAmpac is owned by Pritzker, a private Venture Capital group with a portfolio of companies across a range of industries, from Pharmacies to Gas distribution. The Pritzker Group is valued at $3.5 billion, and the estimated wealth of the Pritzker family is over $9 billion dollars making them one of the wealthiest families in America. 

Ultimate is their fourth acquisition in the UK, all within a year, this suggests that they have clearly targeted the UK Flexible Packaging Market as an ideal place to focus their investment. This decision is somewhat surprising to say the least, particularly as Mondi withdrew from the market in 2019, with a ‘write off’ of around £50 million. In addition, according to their accounts, the top four UK flexible companies in aggregate reported UK losses of circa £24 million in 2018 /2019. Despite an overall increase in their sales.

According to the Directors reports, these losses were generally due to lower margins allied to ‘increasing competition’ so flexible packaging hardly looks like a market sector making easy money.

It is also interesting that the acquisition by ProAmpac of these four companies will put them in the UK’s top four flexible suppliers, along with Coveris with sales of £170m, Amcor £107m, and Saica £90m. There is no doubt the flexibles industry is consolidating at an alarming rate, and we are aware of at least one other major independent who is currently known to be in extended negotiation to sell out.

As this consolidation increases, the choice for flexible packaging buyers decreases. It is also generally acknowledged that these large, multi-national, centralised groups are inevitably more inflexible in their dealings with customers and suppliers. Against this background, we believe National flexible remains the ideal partner for companies of all sizes, not only due to our unique business model, with 100% owned by its employees. This means that our customers ‘feel’ the difference as they are dealing with highly motivated people who will always do their very best to meet the needs of their customers.  

I trust this information is of interest and welcome any thoughts or questions you may have on the items raised. Meanwhile, I would welcome your views and why not join me on LinkedIn for more regular updates.



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