By Drew Miller, Senior News Editor, PPI Pulp & Paper Week, RISI
SAN FRANCISCO,
Oct. 14, 2009 (RISI) -
There really hasn't been a lot of merger & acquisition (M&A) activity in the North American pulp & paper space in the last year. Deteriorating market conditions earlier this year, caving stock prices, corporate restructurings, bankruptcies, and the severe contraction in the credit availability all contributed to this dearth of activity.
Most market players were just too busy trying to keep their head above water - and some couldn't even do that.
But now, most industry observers share the view that the economic outlook, in general, is improving. There are many positive signs. The stock market appears to have bottomed and, as of this week, the Dow was closing in on the 10,000 threshold.
Maybe with these positive economic indicators, M&A activity will pick up.
Times are a changing.
Several industry analysts think the time is ripe for consolidation - especially in the containerboard sector - as a way to help stabilize the market.
In August last year, International Paper (IP) bought Weyerhaeuser's containerboard assets in a $6.0 billion deal that created the No. 1 player in North America with an approx. 29% domestic share. Earlier, RockTenn also extended its reach in containerboard by buying Solvay Paperboard in upstate New York in a $1.0 billion deal.
IP and RockTenn are not widely expected to participate in the next go-round of deals - but hey you never know. Industry observers think likely candidates are Smurfit-Stone Container, Temple-Inland, and possibly Georgia-Pacific. Analysts have bantered around a lot of different scenarios and synergy numbers and no can precisely say when the next move will happen.
But happen it will - maybe even coinciding with the expected shut of capacity rumored for the past few weeks.
