Tag Archives: Industry

Smurfit Kappa rejects a bid from International Paper

Smurfit Kappa has received an unsolicited acquisition proposal from International Paper (IP), which it has rejected.Smurfit Kappa rejects a bid from International Paper

IP reportedly proposed to acquire Smurfit Kappa, and Smurfit Kappa shareholders would receive a combination of cash and a minority holding in the combined business.

Europe’s largest cardboard box maker Smurfit Kappa said the proposal “fails entirely to reflect the Group’s strong growth prospects and attractive industry outlook” – which could leave the door open to an improved offer being considered in the future.

Smurfit Kappa’s enterprise value is about €9.8bn, according to FactSet data.

The board of Smurfit Kappa said after considering the proposal it was in the best interests of the Group’s shareholders to pursue its future as an independent company.

Smurfit Kappa recently announced EBITDA for 2017 of €1.2bn and a full year ROCE of 15%.

Plcs are obliged to ensure there is not a false market in their shares. It also increases the pressure on the bidder to comply with relevant regulatory timelines. This may have contributed to SKs decision to make the approach public.

Such a deal would create a super-group paper company and would mean a review of the deal by numerous competition authorities given the scale of the transaction and the spread of the two companies’ footprints. However, it may be deemed that these are more complementary than overlapping or there may be approval conditional on a number of divestitures. The Ball-Rexam mega deal approval also stipulated certain divestitures.

Liam O’Mahony, chairman of Smurfit Kappa said: “The Board of Smurfit Kappa has unanimously rejected this unsolicited and highly opportunistic Proposal.

“The Board believes that it is in the best interests of all stakeholders for the Group to pursue its future as an independent company, headquartered in Ireland, operating as the European and Pan-American leader in paper-based packaging. We strongly advise shareholders to take no action.”

International Paper did not comment.

Nicholas Mockett, head of packaging M&A at Moorgate Capital, said: “It is a strong rebuttal of the approach which may ensure IP walks away at this stage. A plc has a duty to shareholders to give due consideration to a legitimate approach. If IP increased its offer Smurfit Kappa would therefore reassess. The approach is not surprising given Smurfit Kappa’s strong position in Europe and Latin America and IPs strengths in North America. IP has recently increased its core focus, with the recent Graphic Packaging transaction.”

Businesses are not looking to reduce packaging costs

A recent nationwide YouGov survey conducted for Davpack Packaging has shown that 95% of small businesses are not looking to reduce packaging costs.

Businesses are not looking to reduce packaging costs

The survey, conducted in July, showed, however, that 36% of decision-makers in over 1,100 small and medium-sized businesses are actively looking to cut their business costs in the near future. With most of the responses citing leaving the E.U. as their key reason for cutting costs, the survey shows that packaging is an area that is least likely to be cut. Staffing, marketing, and professional services respectively, have shown to be areas that are more likely to be cut ahead of the country’s political future.

While this may mean a slow decline in the employment or service industries outside the packaging industry, most SME’s decision makers are positive about the future of the packaging industry and are keen to ensure that their packaging continues to communicate and display their company’s values and beliefs to their customers.

Barney Byfield, managing director of  Davpack Packaging, commented: “We are in constant conversation with our customers about their business needs, and Brexit is often mentioned as an uncertainty. However, the indications are that the packaging market continues to expand and that customers don’t foresee a need to cut costs on this business essential. In fact, we are currently experiencing strong demand across the board, not just within economy packaging supplies, but also added value areas such as custom printed boxes and e-commerce solutions”

“However, many businesses do feel a need to offset the uncertainty around the future impact of Brexit with some cost reductions today as an insurance policy. We will continue to monitor the situation, because if companies feel more affected as Brexit gets closer, this is likely to affect business confidence and, in turn, demand for packaging supplies.”

Of the 5% who do want to target reductions in packaging, 31% cited that Britain leaving the EU was the main reason for this consideration. While the country’s decision stands, the packaging industry will see a shift in spending, but it can be assured that amongst SME’s the packaging industry will continue to use packaging as a marketing tool as the country presses forward.

Plastics companies rely heavily on EU workers

Plastics companies rely heavily on EU workers, says BPF survey. The plastics industry is highly reliant on EU workers and Brexit has pushed firms to automate some roles, according to a survey by the British Plastics Federation.

Plastics companies rely heavily on EU workers

The UK plastics industry is the third largest manufacturing sector in terms of employment, employing 166,000 people, of which, roughly 18,000 are non-UK EU citizens and 4,000 come from the rest of the world. EU workers account for roughly 11% of the entire workforce in the industry and one in five of all factory floor workers.

The survey showed that more than half of UK plastics companies rely on employing temporary workers during busy periods — and here EU citizens play a very prominent role, making up 48% of temporary workers. A quarter of the companies surveyed stated that they would like any new immigration policy to help them meet short-term, temporary needs.

Before the referendum, roughly half of UK plastics companies were having trouble recruiting. January’s BPF Business Conditions Survey showed that this has increased, with just under two-thirds of plastics companies now reporting difficulty filling key roles. The more recent survey, specifically about EU workers, shows that 10% of companies feel they are having trouble filling vacancies as a direct result of the EU referendum whereas 58% do not feel the result has affected their overall workforce.

The survey shows that factory floor staff and engineers are the toughest roles to fill and in order to plug the potential gap left by EU workers, 61% of companies say they may employ UK workers, 39% may train existing staff, while almost a third (29%) are also looking into the possibility of automating the roles.

Commenting on the findings, chairman of the BPF Brexit Taskforce, Mike Boswell, said: “Our industry has for some time experienced difficulty in finding the right staff for key roles and unfortunately Brexit appears to have made this situation worse. This survey has underlined the importance of EU workers in our industry.

“If companies that rely on temporary workers to fulfil their orders lose access to almost half of the temporary workforce, this will pose an enormous challenge. It is important that at this point companies are exploring all feasible alternatives, including investment in upskilling the existing workforce as well as the development and implementation of technology to automate roles, for which we will require further assistance from the UK government.”

The role of EU workers in the plastics industry survey was carried out in 2017 and was completed by almost 90 companies. To access the full survey, as well as a summary of the findings, visit: http://www.bpf.co.uk/eu/home.aspx

The benefits of packaging need to be heard

The benefits of packaging need to be heard. The world has changed enormously since INCPEN was established in 1974. Yet today, some of the issues the packaging industry has to deal with seem depressingly familiar.

The benefits of packaging need to be heard

 

One of the first challenges we faced in 1974 was the growing problem of litter, with environment groups blaming packaging. They were also critical of increasing consumerism and people’s changing lifestyles but they criticised packaging instead because this put the blame on industry, not individuals.

Litter, especially marine litter, remains a problem and packaging is still singled out as the main culprit. The reason given by politicians for introducing charges for carrier bags is typically to prevent them ‘spoiling the landscape’ as litter. The facts are conveniently ignored. According to the latest (2014) survey of litter by Keep Britain Tidy, commissioned by INCPEN, carrier bags were less than 1% of littered items. But the charge has set a precedent for adding costs to packaging and there are now campaigns to impose deposits on drinks containers and taxes on other types of packaging.

No one points out that there is a huge difference between a carrier bag charge, which can be avoided simply by using your own bag, and deposits or taxes which everyone has to pay. In response to the public’s negative perception of packaging, policymakers are tending to propose measures that typically focus on used packaging.

The industry needs to continue to develop clever packaging that responds to changing demographics, lifestyles and shopping habits and helps make supply chains more sustainable. But if companies want the freedom to be able to use the best pack for the job, they will also have to explain the role of packaging and that it has a net positive enviroment benefit in protecting more resources than it uses.

Glass Packaging Industry Legislation

Glass Packaging Industry the European Container Glass Federation (FEVE) has supported the European Commission’s Circular Economy Packaging.

Glass Packaging Industry

Glass Packaging Industry. A new FEVE paper said it supports a legislative framework for mandatory separate collection schemes, targets focused on recycling, and acknowledgement of the superior value of permanent materials.

Today, 73% of all post-consumer glass packaging is collected for recycling on average in the EU, and about 90% of it is actually recycled into new bottles and jars.

But FEVE said the challenge is to collect the remaining 27% while ensuring the quality of recycled glass.

Vitaliano Torno, president of FEVE, said: “For the circular economy to function and for all member states to meet their targets, it is fundamental that separate collection schemes become mandatory across the EU to increase the quantity as well as the quality and safety of recycled materials”.

He added that the new recycling targets of 75% (by 2025) and 85% (by 2030) provide a good framework to support investments in separate collection schemes and recycling infrastructure. But the targets must unambiguously focus on recycling, without any competing EU-wide targets on preparing packaging for re-use. Reusable packaging is a product that only satisfies demand from very specific markets, typically local or those functioning in closed circuits, and such targets would create barriers to the free movement of goods in the internal market.

“Materials that can maintain their properties during their repeated use and that can be recycled over and over again must be put at the heart of the EU circular economy”, said Torno. “Glass is a permanent material that is 100% and endlessly recyclable without any degradation of its intrinsic properties no matter how many times it is recycled. This allows for important raw material and energy savings with major benefits for the environment and the economy.”