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Forest sector hotbed of M&A activity: PwC


May 1, 2007
By Pulp & Paper Canada

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According to a recent report by PricewaterhouseCoopers, there were over 280 mergers and acquisitions in the global …

According to a recent report by PricewaterhouseCoopers, there were over 280 mergers and acquisitions in the global forest, paper and fibre-based packaging sector in 2006.

The report, called Branching Out, also confirmed the value of these mergers and acquisitions totaled nearly US$26 billion.

North America remained at the forefront of the forest, paper and packaging merger and acquisition activity, with two-thirds of the share of deal values in 2006. The second largest forest products company deal that year took place in Canada Domtars acquisition of Weyerhaeusers fine paper business, for US$3.3 billion. Cascades acquisition of 50% of Norampac for US$476 million and West Fraser Timbers purchase of 13 lumber mills from International Paper for US$325 million, ranked among the ten largest deals in North America.

The global forest, paper and packaging industry continued to face challenges in 2006 foreign exchange fluctuations, increased energy and transportation costs, waning demand and the impact of emerging markets on global competition, said Craig Campbell, partner, PwC Global Forest, Paper and Packaging practice. In spite of these challenges, M&A activity has risen, with companies selling off underperforming and non-core businesses. The leading players are also seeking to extend their reach globally.