Paper360 - September/October 2015 - (Page 38)

the bottom line | CONSOLIDATION WATCH Conventional wisdom says that the pulp and paper industry is consolidating, which is necessary to its longterm health. In this and future issues of Paper360°, this column, provided by Fisher International, will analyze consolidation within different grades of pulp and paper. Specialty Grades in North America Figure 1: North American Specialties Market Capacity Share (2007 & 2015). Source: FisherSolvetm © 2015 Fisher International, Inc. Figure 1: North American Specialties Market Capacity Share (2007 & 2015). Source: FisherSolvetm © 2015 Fisher International, Inc. Figure 2: European Coated Paper Market Share. Source: FisherSolvetm © 2015 Fisher International, Inc. Figure 2: European Coated Paper Market Share. Source: FisherSolvetm © 2015 Fisher International, Inc. Figure 3: Release Paper market shares in North America. Source: FisherSolvetm © 2015 Fisher International, Inc. Figure 3: Release Paper market shares in North America. Source: FisherSolvetm © 2015 Fisher International, Inc. Specialty papers is a broad and varied market made up of more than 40 finished product categories. The world makes nearly 20 million metric tonnes of specialty papers on roughly 1,000 paper machines operating in 572 mills. North American capacity for all specialty products amounts to 3.6 million tonnes per year, or about 3 percent of North American paper and market pulp production. However, as it is cited as a profitable segment, it warrants a closer look. Since "specialty papers" contains products with widely different characteristics, when considering consolidation we'll look not only at the category as a whole, but also in sub-segments. Many machines making specialties produce multiple grades, some of which are not specialties. In the last few years there have been some significant shifts in ownership. Note in Figure 1 the impact of the recent Verso-NewPage merger, KapStone's new position from the MWV and Longview Fibre acquisitions, and PCA's acquisition of Boise. Companies in this market are constantly seeking to make new products that create new niches. So, to understand the dynamics of consolidation, it is necessary to look closely at the grades and finished products that comprise the space. More often than not, machines that make specialties also make other grades (which may or may not be in the specialty category). The ability to jump in and out of the market as opportunities arise or fade away is characteristic of specialties papermakers. Figure 2 shows the participation of individual companies in sub-segments of specialties, with each color representing a different manufacturer and the total bar height representing current capacity. Some grades, like electronic and industrial, are quite fragmented, whereas others, such as release and laminating, are more concentrated. Every grade except cigarette has at least eight or more participants. Seen at grade level, specialties is relatively fragmented, despite some consolidation activity over the last eight years: in Release Paper, for example, the Verso-NewPage deal as well as Expera's acquisition of Thilmany and Wausau's specialty unit (Figure 3). Analyzing M&A in specialty papers is an interesting exercise because of the number of players, the overlap between them and the wide differences in performance. With so many finished products and so much fragmentation, it seems likely that there should be consolidation opportunities. Figure 4 shows the many players in each finished product market in North America alone. To find good combinations among them, one would consider several characteristics of each market and individual acquisition targets. This analysis was compiled by Jon Kerr, senior consultant, Fisher International Inc., using Fisher International's FisherSolve™, a data-driven business intelligence tool that contains a paper industry specific database that accurately describes the capacity of every pulp and paper mill in the world making 50 tpd or more. To learn more, please visit www.fisheri.com. 38 Paper360º SEPTEMBER / OCTOBER 2015 www.tappi.org http://www.fisheri.com http://www.tappi.org

Table of Contents for the Digital Edition of Paper360 - September/October 2015

Setpoint
Over the Wire
Stora Enso Ostroleka PM5 Proves Less Is More
Valmet’s Strategy Combines Process Technology, Automation and Services
Doubletree Paper Upgrades Its Water Treatment System
WEIG-Karton Achieves Results With Web Inspection at Former and Press Section
Wants vs Cans
Rotary Press Compacts Sludge to Cake
TAPPI Journal Summaries
Foreign Exchange and the Pulp and Paper Industry
Consolidation Watch
Knowledge Builder
Association News
ASPI News
Online Exclusives
Index of Advertisers

Paper360 - September/October 2015

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