In total, $21.3bn (£14.4bn) of deals were signed in 2008, down from $27.6bn in 2007, and PwC warned that continued financial uncertainty and a collapse in worldwide demand could lead to a record low in 2009 in terms of deal values.

Clive Suckling, global forest, paper and packaging leader at the firm, said: "As 2009 unfolds, many companies in the sector find themselves on a knife-edge.

"The industry looks set to undergo an intense round of painful distress-led transformation and is likely to emerge in two or three years time looking very different from today."

In previous years, pulp and paper production has delivered by far the largest total deal value in the FPP sector.

Suckling said that deals are driven by the existence of benefit or need to consolidate, as well as the availability of the required finance. "With the industry on course towards significant restructuring, the first of these exists in abundance," he added. "It is the second which will determine the level and pace of activity in the period ahead."

Also see:
Survey shows Europe falling behind in global forest market