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First Quarter 2018 Review Q1 ‘18 - pmcf.com

PACKAGING M&A PULSE. First Quarter 2018 R e v i e w Q1 18 INSIDE THIS ISSUE. Packaging Market M&A Overview & Analysis PAGE 3. M&A Activity in Rigid & Flexible Plastic, Paper, and Other Packaging Types PAGES 4 7. Current Public Packaging Valuation Trends PAGE 8. Private Equity M&A Activity PAGE 9. PMCF Transaction Announcements has been acquired by has acquired have been acquired by INDUSTRIAL & E-COMMERCE INDUSTRIAL & MEDICAL BEVERAGE. Paper Packaging & Machinery Rigid Plastic Packaging Rigid Plastic Packaging Company Sale to Strategic Buyer Company Sale to Strategic Buyer Strategic Acquisition ABOUT PMCF.

Q1 ‘18 WWW.PMCF.COM INSIDE THIS ISSUE Packaging Market M&A Overview & Analysis PAGE 3 M&A Activity in Rigid & Flexible Plastic, Paper, and Other Packaging Types PAGES 4–7

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Transcription of First Quarter 2018 Review Q1 ‘18 - pmcf.com

1 PACKAGING M&A PULSE. First Quarter 2018 R e v i e w Q1 18 INSIDE THIS ISSUE. Packaging Market M&A Overview & Analysis PAGE 3. M&A Activity in Rigid & Flexible Plastic, Paper, and Other Packaging Types PAGES 4 7. Current Public Packaging Valuation Trends PAGE 8. Private Equity M&A Activity PAGE 9. PMCF Transaction Announcements has been acquired by has acquired have been acquired by INDUSTRIAL & E-COMMERCE INDUSTRIAL & MEDICAL BEVERAGE. Paper Packaging & Machinery Rigid Plastic Packaging Rigid Plastic Packaging Company Sale to Strategic Buyer Company Sale to Strategic Buyer Strategic Acquisition ABOUT PMCF.

2 P&M Corporate Finance ( PMCF ) is an investment banking and M&A advisory firm, focused on INVESTMENT BANKING. middle market transactions, with professionals in Chicago, Detroit, and globally in 27 countries SERVICES: through its partner firm (Corporate Finance International). PMCF was founded in 1995 and has Company Sales successfully closed hundreds of transactions. Mergers & Acquisitions PMCF's Plastics & Packaging Group has extensive industry knowledge and advises niche leaders Divisional Divestitures and specialty companies across a wide range of packaging end markets.

3 Offering a depth of Capital Raising advisory services, PMCF's senior bankers are involved in every step of the transaction to ensure Strategic Assessments &. clients meet or exceed their sale, acquisition, financing, and strategic growth objectives. PMCF Sale Planning focuses on serving as a trusted advisor to shareholders and providing unbiased advice over the short and long term. PMCF is an affiliate of Plante Moran, one of the nation's largest professional services firms. PMCF Leadership JOHN HART PHIL GILBERT MATT JAMISON. Managing Director Managing Director Managing Director Plastics & Packaging Group Leader Industrials Group Leader Business Services Group Leader 2 | P A C K A G I N G M & A P U L S E | 2 0 17.

4 Market Summary & Outlook - Q1 2018. Global M&A deal value hit a record high in the First Quarter of 2018. driven primarily by clarity on US tax reform, economic growth in Eu- PACKAGING M&A DEALS BY BUYER T YPE. rope, and the return of mega deals across the healthcare and energy sectors. Global M&A deal volume on the other hand decreased 11% S T R AT E G I C P R I VAT E E Q U I T Y P L AT F O R M P R I VAT E E Q U I T Y A D D - O N. year-over-year as the trend toward larger deals continues. 350. 307. NUMBER OF DEALS. 294. 300. 269 51. Despite the slight pullback in global M&A volume, the packaging sector 33.

5 54. 250 234. got off to strong start in 2018 and is on pace to meet or exceed the 33 61. 200 48 50. multi-year high volume of deals observed in 2017. The sector consisted 64. of 74 deals in Q1 2017 representing the 8th straight Quarter with +70 150. packaging transactions. The healthy level of packaging M&A activity 100. 190 195 70 74. was supported by continued strategic buyer interest, however both pri- 137 188 10 14. 17. 50 15. vate equity platform investments and add-ons continue to increase as 45 43. a percentage of all packaging transactions. 0 2014 2015 2016 2017 Q1 2017 Q1 2018.

6 Packaging deal volume was led by the paper segment as strategic buy- ers continue to look towards M&A to drive top-line growth, consolidate TOTAL PACKAGING M&A BY Quarter . volume, and generate synergies. Deal activity in rigid plastic packaging is up by 5 deals compared to Q1 2017 driven in large part by private Q2 17 Q3 17 Q4 17 Q1 18. equity interest in the bottles and closure segment. Flexible plastic packaging deals were down 27% compared to Q1 2017 due in part 89 72 76 74. to sustained focus from both strategic and private equity buyers and Q2 16 Q3 16 Q4 16 Q1 17. the lack of available targets for acquisition.

7 Although there remains tremendous interest in the segment with key consolidators such as 73 77 71 70. ProAmpac, Constantia Flexibles, Transcontinental, RPC Group all com- pleting flexible plastic packaging deals in Q1 2018. Other notable transactions that were announced or closed in Q1 2018 PACKAGING M&A DEALS BY T YPE. included the following: Q1 2017 Q1 2018 17 '18 Change PAI Partners acquisition of Alb a for $ billion 2012 # % # % # %. AEA Investors acquisition of Spectrum Plastics Group Rigid Plastic 15 21% 20 29% 5 33%. WestRock's acquisition of Kapstone Paper and Packaging Corpo- Flexible Plastic 15 21% 11 16% -4 -27%.

8 Ration for $ billion (announced) Paper 23 33% 25 31% 2 9%. Wellspring Capital Management's acquisition of SupplyOne, Inc. Other 17 24% 18 24% 1 6%. Leonard Green & Partner's acquisition of ProMach, Inc. TOTAL 70 100% 74 100% 4 6%. Note: Other packaging includes machinery/equipment, distributors, glass, and metal From a valuation perspective, the limited number of disclosed and available packaging transaction multiples during the First Quarter of 2018 reflect similar pricing levels to 2017. These strong valuation lev- SELECT PACKAGING TRANSACTIONS: AVERAGE EV / EBITDA MULTIPLE.

9 Els can be attributed to the availability and low cost of capital and the 10. aggressiveness exhibited by both strategic and private equity buyers in pursuing acquisition targets. 8. 6. With strong equity and debt markets and favorable macroeconomic trends, the outlook for packaging M&A remains positive. We believe 4. the sector is constrained in large part by scarce, quality acquisition targets. There remains a supply and demand imbalance which has cre- 2. ated a prolonged seller's market' and the resultant multi-year highs in 0. valuations. These market conditions could prompt additional share- 2011 2012 2013 2014 2015 2016 2017.

10 Holders to contemplate a transaction in the short term as most M&A Source: PMCF Estimates, Capital IQ, Thomson Reuters experts are expecting a correction in the next 12 - 18 months. Data based on proprietary collection of select transactions Sources: Capital IQ, Pitchbook, Thomson Reuters, Company Reports, Factset, PMCF W W W . P M C F. C O M | 3. Rigid Plastic Packaging Transaction Activity TRANSACTIONS BY BUYER T YPE RIGID PLASTIC PACKAGING M&A BY PACKAGE T YPE. S T R AT E G I C P L AT F O R M ADD-ON. Q 1 2 0 17 Q1 2018. 80 CLOSURES. 80 77 7%. NUMBER OF DEALS. 14 68 BOTTLES.


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