PACKAGING INDUSTRY UPDATE FEBRUARY

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1 Investment banking services are provided by Harris Williams LLC, a registered broker-dealer and member of FINRA and SIPC, and Harris Williams & Co. Ltd, which is authorised and regulated by the Financial Conduct Authority. Harris Williams & Co. is a trade name under which Harris Williams LLC and Harris Williams & Co. Ltd conduct business.

2 PACKAGING INDUSTRY UPDATE INTRODUCTION Harris Williams & Co. is pleased to present our packaging industry update for February This report provides commentary and analysis on current capital market trends and merger and acquisition dynamics within the global packaging industry. We hope you find this edition helpful and encourage you to contact us directly if you would like to discuss our perspective on current industry trends or our relevant industry experience. CONTENTS WHAT WE RE READING ECONOMIC UPDATE KEY THEMES PUBLIC COMPARABLES PUBLIC MARKETS SELECT M&A ACTIVITY OUR PRACTICE Harris Williams & Co. is a leading advisor to the packaging industry. Our significant experience covers a broad range of end markets, industries, and business models. Packaging Types Materials Applications CONTACTS Patrick McNulty Managing Director pmcnulty@harriswilliams.com +1 (804) Bags Bottles & Cans Caps & Closures Flexible Pouches Films Foil Laminations Paperboard Plastics Specialty Paper HARRIS WILLIAMS & CO. DEAL SPOTLIGHT Cosmetics E-Commerce Food & Beverage Healthcare Industrial Other Darwin Olympia Director dolympia@harriswilliams.com +1 (804) Brad Morrison Vice President bmorrison@harriswilliams.com +1 (804) a portfolio company of has been acquired by Packaging Dynamics Most recently, Harris Williams & Co. advised Packaging Dynamics, a portfolio company of Kohlberg & Company, on its sale to NOVOLEX, a portfolio company of Wind Point Partners. Packaging Dynamics is a leading manufacturer of flexible packaging solutions and specialty laminations. Brandt Carr Associate bcarr@harriswilliams.com +1 (804) a portfolio company of has been acquired by Ranpak Corporation Harris Williams & Co. also recently advised Ranpak Corporation (Ranpak), a portfolio company of Odyssey Investment Partners, on its sale to Rhône Capital. Ranpak is a manufacturer of protective packaging systems. a portfolio company of has been acquired by Hilex Poly The firm also advised Hilex Poly, a portfolio company of TPG Growth, on its sale to Wind Point Partners. Hilex Poly is a manufacturer of plastic bag and film products in North America, operating the country s largest closed-loop plastic bag recycling facility. PAGE 1

3 WHAT WE RE READING FROZEN FRUIT SALES SOAR AS SMOOTHIES GET POPULAR The Wall Street Journal 2/3/2015 Demand for frozen fruits is soaring as smoothies are becoming more popular in the U.S. Dole Packaged Foods, the largest seller of frozen fruit in the U.S., estimates that in 2014 about 60% of frozen fruit purchased went into smoothies, up from about 21% in Frozen fruit sales have topped $1 billion annually, up 67% since 2010, according to Nielsen. Cascadian Farm, a line of organic foods from cereal to frozen produce owned by General Mills Inc, is optimistic about new packages that will be made of thicker plastic covered in shiny graphics, some that sit upright on shelves and have resealable zippers. Read the full article here. THE CHIPOTLE EFFECT: WHY AMERICA IS OBSESSED WITH FAST CASUAL FOOD Washington Post 2/2/2015 The market for fast casual food, which is almost but not quite fast food, has grown by 550% since 1999, more than ten times the growth seen in the fast food industry over the same period, according to data from market research firm Euromonitor. Chipotle and Panera, likely the best known purveyors of the category, have seen their sales quadruple and triple, respectively, during that time. Panera has taken steps to be more environmentally friendly, including a redesign of all of its packaging last year to promote recycling. Read the full article here A RECORD YEAR FOR PACKAGING M&A DEALS Plastics News 1/28/2015 Last year s merger and acquisition activity in the packaging sector reached a record level. Overall deal volume hit $29.9 billion last year, up from $21.7 billion in 2013, $18.4 billion in 2012, and $28.4 billion in While lots of deals are getting done, they also are for valuations not seen in several years. The average multiple for packaging transactions was 7.4 times earnings before interest, taxes, depreciation and amortization in That multiple was 6.8 just the year before and 7.0 in Read the full article here. RIGID PACKAGING OUTLOOK REMAINS STRONG Packaging News 1/8/2015 One of the key factors behind the packaging industry s recent growth spurt has been the continued success of rigid plastic manufacturers. The performance of this important industry sub-sector has been driven by a combination of strong innovation and a growing number of consumer goods companies switching their products out of other packaging materials and into rigid plastics. Demand for rigid plastics isn t expected to wane any time soon. According to Smithers Pira, the global rigid plastic packaging industry is forecast to grow during the period by 5.2% to $174 billion. Given the bullish projections, it would be no surprise to see similarly high levels of M&A activity. Read the full article here. IT S PLASTIC FOAM PACKAGING, NOT THE FOOD, THAT S TO GO UNDER A NEW YORK RULE New York Times 1/7/2015 Nearly two years after Mayor Michael Bloomberg first proposed banishing foam containers in his final State of the City address, Mayor Bill de Blasio has pledged to complete the deed. Beginning on July 1, food establishments will be barred from using plastic foam cups or containers, compelling purveyors of curbside cart fare and Chinese takeout, among others, to find alternatives. The sale of packing peanuts within the city limits will also be prohibited, though peanut-laden parcels can still be shipped to New Yorkers from elsewhere. New York will now be the largest city in the country, following San Francisco, Seattle and Portland, Oregon, to prohibit the foam containers. Read the full article here. PAGE 2

4 ECONOMIC UPDATE OIL PRICES Global oil prices continued their decline in early 2015 as low demand growth for oil in Europe and Asia, combined with increasing supplies in the United States and the Middle East, have driven prices down to the lowest levels since early The impact of the decline in prices could have a widespread effect on the global packaging industry. First, lower gas prices could boost discretionary spending from global consumers as they save money at the pump. Additionally, falling prices could reduce input prices for many plastic packaging providers, potentially resulting in higher profits for those who can capture additional margins. $200 $150 $100 $50 Oil Prices (Price per Barrel) $ WTI Brent Feb-15: $52.99 Feb-15: $57.00 GDP U.S. Real GDP increased by 0.6% in Q (annual rate of 2.6%) led by strong exports and personal consumption. Even factoring in a dismal first quarter, full-year GDP in 2014 grew 2.4%, the best annual performance since 2010, and at an annual rate of 4% over the last nine months. EU-28 Seasonally adjusted GDP in the EU-28 for Q rose by 0.4% in Q4 2014, with 1.3% annualized growth. 3% 2% 1% 0% (1%) (2%) (3%) (4%) (5%) GDP (Quarter-Over-Quarter Growth) U.S. EU-28 Q4-14: 0.6% Q4-14: 0.4% INDUSTRIAL PRODUCTION INDEX U.S. Industrial production decreased by 0.1% from November to December, although the manufacturing sector was notably better than the headline number due to a 7.3% drop in utilities. Capacity utilization decreased 0.3% in December to 79.7%. EU-28 Industrial production increased by 0.1% from November to December 2014, led by durable consumer goods, intermediate goods, and capital goods. Meanwhile, non-durable goods fell by 1.4%. CONSUMER SENTIMENT The Consumer Sentiment Index was up 4.6 points in the January reading to 98.2 for the highest level since January The expectations component, up 5.0 points to 91.6, was also at its highest level since January 2004 and reflects confidence in the outlook for jobs and income. The current conditions component, up 3.5 points to 108.3, was at its highest level since January This gain points to ongoing acceleration in consumer activity Industrial Production Index U.S. EU-28 Consumer Sentiment Index Jan-15: 98.2 Dec-14: Dec-14: PAGE 3

5 KEY THEMES INPUT PRICES With raw material costs often representing more than 50% of COGS, packaging companies must aggressively manage input costs. The packaging industry relies heavily on petrochemical feedstock, causing significant input price volatility that is influenced by oil and natural gas prices, as well as supply/demand dynamics domestically and abroad. A two-year streak of steady resin price increases has ended, as resin prices have been on a downward trajectory recently along with the price of oil. Many experts expect the decline in oil, natural gas, and resin prices to continue as oversupply persists along with continued tepid demand. Pulp and paper is another critical raw material for the industry and one that has experienced less price volatility over the past three years. 200% 150% 100% 50% 0% Key Material Price Trends (Indexed) Crude Oil Nat Gas Pulp PET LDPE HDPE ENVIRONMENTAL & SUSTAINABILITY Sustainability and recycling initiatives have become the new norm in the industry, and we expect these trends to continue with a focus on eco-friendly products. Companies are developing new ways to incorporate post-consumer, recycled material as feedstock for making new products. Corporate responsibility and the eco-friendly angle sit well with today s consumers. Recycling materials can reduce input costs and increase efficiency, without compromising performance. Companies continue to find more ways to go green across substrates and applications. $20 $16 $12 $8 $4 $0 Green Packaging Demand ($ in billions) $8.3 $9.0 $10.8 $12.5 $ ROBUST E-COMMERCE GROWTH Rapid growth in e-commerce will boost demand for protective packaging solutions and lead to continued steady growth. The e-commerce market is projected to grow ~16% annually through 2017, substantially faster than overall retail sales. An increasing number of online orders per shopping experience and rising average order value are driving the industry growth trends. As a higher percentage of goods are purchased online and shipped directly to consumers, packaging providers will need to adapt to the evolving implications and role packaging plays in consumer marketing. Global E-Commerce Sales Projections $2,500 ($ in billions) $2,357 $2,053 $2,000 $1,771 $1,505 $1,500 $1,000 $500 $ PAGE 4

6 PUBLIC COMPARABLES As of February 17, 2015 ($ in millions, except per share amounts) Stock Performance 3 Year Free Cash Current % of Revenue 2014 Price / Earnings TEV / EBITDA Flow Net Debt / Price LTM High Mkt Cap TEV CAGR Revenue EBITDA Margin 2015E 2016P LTM 2015E 2016P Conversion 1 EBITDA Amcor Limited $ % $12,743 $15,767 (3.9%) $11,631 $1, % 18.0x 17.2x 13.0x 11.0x 10.6x 78.5% 2.2x Sealed Air Corporation % 9,762 13, % 7,747 1, % 21.8x 19.0x 12.5x 11.9x 11.1x 86.1% 3.7x Sonoco Products Co % 4,754 5, % 4, % 17.6x 15.9x 9.4x 8.7x 8.2x 72.4% 1.8x Bemis Company, Inc % 4,705 6,005 (6.5%) 4, % 18.3x 17.0x 10.2x 9.9x 9.6x 68.5% 2.2x AptarGroup, Inc % 4,224 4, % 2, % 22.8x 20.3x 10.2x 10.4x 9.8x 66.9% 1.0x Berry Plastics Group, Inc % 4,131 7, % 5, % 20.3x 16.7x 11.2x 9.0x 8.7x 71.4% 4.5x Huhtamaki Oyj % 2,974 3, % 2, % 16.9x 15.4x 11.3x 9.2x 8.5x 50.7% 0.9x Greif, Inc % 2,074 3, % 4, % 17.0x NA 6.9x 7.3x NA 58.7% 2.4x Winpak Ltd % 1,913 1, % % 19.7x 17.9x 13.9x 9.8x 8.5x 65.5% NM Median 97.9% 3.5% 14.2% 18.3x 17.1x 11.2x 9.8x 9.1x 68.5% 2.2x Mean 95.3% 2.8% 14.5% 19.2x 17.4x 11.0x 9.7x 9.4x 68.7% 2.3x Avery Dennison Corporation $ % $4,919 $5, % $6,354 $ % 16.4x 14.4x 8.4x 8.2x 7.7x 78.8% 1.3x CCL Industries Inc % 3,608 4, % 2, % 18.3x 16.6x 10.6x 9.4x 8.8x 69.8% 1.2x Multi-Color Corp % 1,065 1, % % 19.0x 15.6x 10.3x 9.5x 8.5x 79.6% 3.1x Median 96.7% 26.7% 16.3% 18.3x 15.6x 10.3x 9.4x 8.5x 78.8% 1.3x Mean 97.5% 18.9% 15.0% 17.9x 15.5x 9.8x 9.0x 8.3x 76.1% 1.9x International Paper Company $ % $24,138 $33, % $26,168 $4, % 14.9x 13.0x 9.1x 7.9x 7.6x 65.1% 2.3x Rock-Tenn Company % 9,836 12, % 9,978 1, % 16.4x 15.8x 8.1x 7.8x 7.8x 63.8% 1.8x MeadWestvaco Corporation % 9,041 11, % 5, % 24.8x 22.1x 12.6x 11.2x 10.6x 62.8% 2.6x Packaging Corporation of America % 8,089 10, % 5,917 1, % 16.4x 14.7x 9.5x 8.5x 8.0x 78.2% 1.9x Graphic Packaging Holding Company % 5,050 6, % 4, % 20.4x 17.6x 10.0x 9.1x 8.5x 71.0% 2.7x KapStone Paper and Packaging Corporation % 3,169 4, % 2, % 15.6x 14.1x 9.6x 8.5x 8.0x 68.6% 2.2x PH Glatfelter Co % 1,064 1, % 1, % 14.1x 11.4x 8.2x 7.3x 6.4x 40.6% 2.0x Median 99.0% 4.0% 16.8% 16.4x 14.7x 9.5x 8.5x 8.0x 65.1% 2.2x Mean 95.4% 13.9% 16.4% 17.5x 15.5x 9.6x 8.6x 8.1x 64.3% 2.2x Ball Corporation $ % $10,194 $13,172 (0.5%) $8,512 $1, % 19.2x 17.3x 11.0x 11.0x 10.5x 67.4% 2.4x Rexam plc % 5,891 7,753 (3.2%) 3, % 16.0x 15.1x 8.6x 9.4x 9.1x 61.8% 1.4x Owens-Illinois, Inc % 4,276 7,341 (2.5%) 6,820 1, % 10.7x 9.4x 6.4x 6.3x 6.0x 65.7% 2.3x Silgan Holdings Inc % 3,620 4, % 3, % 17.3x 16.0x 9.5x 9.4x 9.0x 73.4% 2.6x Median 95.0% (1.5%) 16.4% 16.6x 15.5x 9.0x 9.4x 9.1x 66.6% 2.4x Mean 90.9% (0.7%) 17.3% 15.8x 14.5x 8.9x 9.0x 8.7x 67.1% 2.2x Overall Median 97.9% 3.5% 16.1% 17.6x 15.9x 10.0x 9.2x 8.5x 68.5% 2.2x Overall Mean 94.8% 7.7% 15.6% 17.9x 16.0x 10.0x 9.2x 8.7x 68.1% 2.2x 1) Free cash flow conversion defined as EBITDA less capital expenditures divided by EBITDA. PAGE 5

7 PUBLIC MARKETS 3-YEAR REVENUE CAGR ( ) 3-YEAR EBITDA CAGR ( ) (0.7%) 2.8% 13.9% 18.9% 6.0% 4.2% 22.5% 18.7% AVERAGE EBITDA MARGIN (2015E) FREE CASH FLOW CONVERSION (2015E) 15.1% 16.5% 17.4% 15.2% 68.7% 76.1% 64.3% 67.1% TOTAL ENTERPRISE VALUE / 2015E EBITDA NET DEBT / LTM EBITDA 8.6x 9.0x 9.0x 9.7x 2.3x 1.9x 2.2x 2.2x PUBLIC COMPARABLES (30-DAY ROLLING AVERAGE OF MEDIAN TEV / LTM EBITDA) 12x 11x 10x Median Current 3-Year 5-Year 11.2x 8.8x 7.8x 10.2x 8.6x 7.9x 9.5x 8.8x 7.2x 9.0x 8.4x 7.9x Total Packaging 10.0x 8.8x 7.5x 9x 8x 7x 6x 5x 4x Feb-10 Feb-11 Feb-12 Feb-13 Feb-14 Feb-15 PAGE 6

8 SELECT M&A ACTIVITY Date Target Target Business Description Acquirer 1/26/2015 MeadWestvaco Corporation MeadWestvaco Corporation provides packaging solutions to healthcare, beauty and personal care, food, beverage, home and garden, tobacco, and agricultural industries worldwide. 12/29/2014 Charter NEX Films Inc. Charter NEX Films Inc. engages in engineering, extruding, and manufacturing monolayer, coextruded, and barrier blown films for packaging applications. 12/23/2014 Constantia Flexibles Group Constantia Flexibles Group GmbH manufactures and sells various flexible GmbH packaging products in Europe, North and South America, Africa, Australia, Asia, and Oceania. 12/10/2014 Tri-Delta Plastics, Inc. Tri-Delta Plastics, Inc. designs, engineers, manufactures, and sells plastic components to the packaging industry. Rock-Tenn Company (Merger) Pamplona Capital Management LLP Wendel Pretium Packaging, LLC 11/24/2014 SIG Combibloc Group AG SIG Combibloc Group AG manufactures and supplies carton packaging and filling machines for beverage and food manufacturers worldwide. Onex Corporation 11/12/2014 Clondalkin Group Holdings B.V., Specialist Packaging Division Clondalkin Group Holdings B.V., Specialist Packaging Division offers specialty secondary packaging solutions for the pharmaceutical, health, and personal care industries. 11/10/2014 Packaging Dynamics Packaging Dynamics Corporation manufactures a broad portfolio of Corporation flexible, paper-based food packaging products, as well as a range of specialty laminated foil-paper products. 9/16/2014 Pro Mach, Inc. Pro Mach, Inc. designs, manufactures, and sells packaging and processing products and solutions for a variety of end markets in the U.S. and internationally. 8/25/2014 Berlin Packaging, LLC Berlin Packaging, LLC manufactures, imports, and distributes plastic, glass, and metal containers and closures. Essentra plc NOVOLEX AEA Investors LP Oak Hill Capital Partners 8/13/2014 Ranpak Corporation Ranpak Corporation produces and supplies paper packaging materials and systems, offering a range of packaging solutions for void fill, cushioning, blocking and bracing, and wrapping applications. 6/19/2014 SPG Holdings LLC SPG Holdings LLC manufactures and markets specialty paper products for the restaurant and foodservice distribution industries. Rhone Capital, L.L.C. Georgia-Pacific Consumer Products LP 6/17/2014 Duro Bag Manufacturing Company Duro Bag Manufacturing Company manufactures and distributes paper bags in North America. NOVOLEX 6/3/2014 Graphic Packaging, Bags and Kraft Paper Graphic Packaging International, Inc., Bags and Kraft Paper Business produces and distributes kraft paper and bags. Mondi Limited 5/1/2014 Pretium Packaging, LLC Pretium Packaging, LLC designs, manufactures, and sells rigid plastic bottles and containers for food, personal care, healthcare, and pharmaceutical end markets in the United States and Canada. 4/22/2014 Pregis Corporation Pregis Corporation engages in the manufacture, marketing, and supply of protective and specialty packaging solutions. Genstar Capital, LLC Olympus Partners 1/6/2014 NewPage Holdings Inc. NewPage Holdings Inc. produces and sells printing and specialty papers in North America. Verso Paper Corp. PAGE 7

9 OUR FIRM Harris Williams & Co. has a broad range of industry expertise, which creates powerful opportunities. Our clients benefit form our deep-sector experience, integrated industry intelligence and collaboration across the firm, and our commitment to learning what makes them unique. For more information, visit our website at Aerospace, Defense & Government Services Building Products & Materials Business Services Consumer Energy & Power Healthcare & Life Sciences Industrials Specialty Distribution Technology, Media & Telecom Transportation & Logistics HARRIS WILLIAMS & CO. OFFICE LOCATIONS Boston Two International Place 24th Floor Boston, Massachusetts Phone: +1 (617) Fax: +1 (617) Cleveland 1900 East 9th Street 20th Floor Cleveland, Ohio Phone: +1 (216) Fax: +1 (216) Minneapolis 222 South 9th Street Suite 3350 Minneapolis, Minnesota Phone: +1 (612) Fax: +1 (612) UNITED STATES Philadelphia 1600 Market Street 21st Floor Philadelphia, Pennsylvania Phone: +1 (267) Fax: +1 (267) Richmond (U.S. Headquarters) 1001 Haxall Point 9th Floor Richmond, Virginia Phone: +1 (804) Fax: +1 (804) San Francisco 575 Market Street 31st Floor San Francisco, California Phone: +1 (415) Fax: +1 (415) EUROPE Frankfurt Bockenheimer Landstrasse Frankfurt Germany Phone: Fax: London 63 Brook Street London W1K 4HS, England Phone: +44 (0) Fax: +44 (0) Beijing Hong Kong Mumbai NETWORK OFFICES New Delhi Shanghai PAGE 8

10 HARRIS WILLIAMS & CO. BUILDING PRODUCTS & MATERIALS INDUSTRY UPDATE JANUARY 2015 SOURCES Bloomberg Bureau of Economic Analysis Capital IQ Federal Reserve Economic Data Eurostat Freedonia New York Times Packaging News Plastics News The Wall Street Journal University of Michigan U.S. Census Bureau Washington Post DISCLOSURES Harris Williams & Co. ( is a preeminent middle market investment bank focused on the advisory needs of clients worldwide. The firm has deep industry knowledge, global transaction expertise, and an unwavering commitment to excellence. Harris Williams & Co. provides sell-side and acquisition advisory, restructuring advisory, board advisory, private placements, and capital markets advisory services. Investment banking services are provided by Harris Williams LLC, a registered broker-dealer and member of FINRA and SIPC, and Harris Williams & Co. Ltd, which is authorised and regulated by the Financial Conduct Authority. Harris Williams & Co. is a trade name under which Harris Williams LLC and Harris Williams & Co. Ltd conduct business. THIS REPORT MAY CONTAIN REFERENCES TO REGISTERED TRADEMARKS, SERVICE MARKS AND COPYRIGHTS OWNED BY THIRD-PARTY INFORMATION PROVIDERS. NONE OF THE THIRD-PARTY INFORMATION PROVIDERS IS ENDORSING THE OFFERING OF, AND SHALL NOT IN ANY WAY BE DEEMED AN ISSUER OR UNDERWRITER OF, THE SECURITIES, FINANCIAL INSTRUMENTS OR OTHER INVESTMENTS DISCUSSED IN THIS REPORT, AND SHALL NOT HAVE ANY LIABILITY OR RESPONSIBILITY FOR ANY STATEMENTS MADE IN THE REPORT OR FOR ANY FINANCIAL STATEMENTS, FINANCIAL PROJECTIONS OR OTHER FINANCIAL INFORMATION CONTAINED OR ATTACHED AS AN EXHIBIT TO THE REPORT. FOR MORE INFORMATION ABOUT THE MATERIALS PROVIDED BY SUCH THIRD PARTIES, PLEASE CONTACT US AT THE ABOVE ADDRESSES OR NUMBERS. The information and views contained in this report were prepared by Harris Williams & Co. ( Harris Williams ). It is not a research report, as such term is defined by applicable law and regulations, and is provided for informational purposes only. It is not to be construed as an offer to buy or sell or a solicitation of an offer to buy or sell any financial instruments or to participate in any particular trading strategy. The information contained herein is believed by Harris Williams to be reliable, but Harris Williams makes no representation as to the accuracy or completeness of such information. Harris Williams and/or its affiliates may be market makers or specialists in, act as advisers or lenders to, have positions in and effect transactions in securities of companies mentioned herein and also may provide, may have provided, or may seek to provide investment banking services for those companies. In addition, Harris Williams and/or its affiliates or their respective officers, directors and employees may hold long or short positions in the securities, options thereon or other related financial products of companies discussed herein. Opinions, estimates and projections in this report constitute Harris Williams judgment and are subject to change without notice. The financial instruments discussed in this report may not be suitable for all investors, and investors must make their own investment decisions using their own independent advisors as they believe necessary and based upon their specific financial situations and investment objectives. Also, past performance is not necessarily indicative of future results. No part of this material may be copied or duplicated in any form or by any means, or redistributed, without Harris Williams prior written consent. Copyright 2015 Harris Williams & Co., all rights reserved. PAGE 9