2018 proved something of an awkward speed dating round for the packaging and paper sector. Efforts to pick up Smurfit Kappa (SKG) and RPC (RPC) dragged on. In March, Smurfit decided that its offer from US paper company International Paper undervalued the business, and relations went cold in June. RPC, on the other hand, was flush with suitors. In keeping with sensible dating etiquette, RPC was patient and entertained multiple offers, extending deadlines for private equity groups Bain Capital and Apollo Global Management to make their propositions – Bain has since dropped out of the running. But RPC evidently saw something in Apollo, god of music and poetry. In December, it recognised that Apollo’s due diligence was "now substantially complete" and extended its deadline, again, to 18 January. At the time of writing, Apollo is yet to seal the deal.
Efforts to consolidate didn’t stop there. One listed UK packaging company chose not to wait on the sidelines for a suitor. DS Smith (SMDS) will soon buy Spanish rival Europac for €1.7bn (£1.5bn) in cash. It has tossed out its plastics division (not on environmental grounds, finance director Adrian Marsh emphasised to us in December), and will look for a year of recovery after its share price was pulped in September. Rising paper prices in the UK and overseas brought shares down across the sector, but DS Smith has a plan. Its 'Made2Fit' technology has helped it end its process of raising box-selling sales prices to counter the surge in paper costs – good for its business with the likes of Amazon, and good for the environment. Mondi (MNDI) also spotted an opportunity in sustainable business, beating analysts' forecasts as it sought to capitalise on the drive to replace plastic bags with paper packaging.
| Name | Price (p) | Market cap (£m) | 12-month change (%) | Trailing PE | Forward PE | Dividend Yield (%) | Last IC View |
| Mondi | 1806 | 6632.36 | -5.52 | 11.2 | 10.6 | 2.81 | Hold, 2,206p, 06 Aug 2018 |
| RPC | 716.2 | 2910.95 | -9.39 | 9.6 | 9 | 3.95 | Hold, 654p, 27 Dec 2018 |
| Smith (DS) | 328.1 | 4493.11 | -31.15 | 9 | 8.1 | 4.57 | Buy, 315p, 07 Dec 2018 |
| Smurfit Kappa | 2172.001 | 5152.26 | -15.814 | 8.6 | 8.4 | 3.68 | Hold, 3,178p, 01 Aug 2018 |
