Branching out — Global deal activity in the forest, paper & packaging industry — 2009 edition

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In this report, we examine both the rationale behind the overall trends and also look at the key individual deals. This year we add a discussion of restructuring activity in North America in order to address the impact of financial distress on that region’s deal market. We look at the year under review, the context of the preceding years, and ahead to the future direction of deal-making in the sector. We also highlight, in our PwC Spotlight and PwC Viewpoint panels, some of the critical issues for companies engaging in deal activity or investment within the sector.

In particular, this year's highlights that:

• Deal numbers were up, but values fell sharply - 2009 saw just three billion dollar-plus deals in the sector
• Latin America led the way, and was home to four of this year's top five deals, reflecting its growing importance as the world's fibre basket
• Interest in timberland investments is set to continue
• North America deals fell sharply, with the focus moving to restructuring high debt loads, while consolidation remained elusive in Europe
• Looking ahead, the immediate prospects for significant recovery in deal value look limited until real confidence is restored amongst the mainstream players. We expect that distress and selective “voluntary” transactions will drive a continuing flow of small value deals.