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Sealed Air offloads Diversey Care division

Sealed Air Corporation has entered into a definitive agreement to sell its Diversey Care division, and the food hygiene and cleaning business within its food care division, to Bain Capital Private Equity for $3.2 billion.

The food hygiene and cleaning business and Diversey Care together will be called New Diversey.

New Diversey generated net sales of approximately $2.6 billion in 2016.

Jerome A. Peribere, president and CEO, said: “We are pleased that New Diversey has a strong partner to support future growth initiatives and drive further expansion. Diversey Care and its related hygiene business has built an impressive innovation pipeline that includes the Internet of Clean, robotics and AHP disinfection technologies, revamped its go-to-market strategy and significantly improved profitability.”

“New Sealed Air, a leading provider of food, product and medical packaging solutions, will continue to focus on accelerating profitable growth and generating strong cash flow through end market opportunities and the global adoption of new products and solutions. Sealed Air’s advanced product portfolio is designed to reduce waste, conserve resources and provide product security, and deliver unique and measurable value to customers and the planet.”

Ken Hanau, MD of Bain Capital Private Equity, said: “Diversey has a long track record of leadership in the hygiene and cleaning solutions market on a global basis.”

“We are excited to partner with the talented team at Diversey to grow across key market verticals and geographies while investing in innovative hygiene solutions. Bain Capital’s integrated global platform and strong growth orientation are well aligned with the strategic vision for Diversey.”

Upon closing of the transaction, Sealed Air expects to use the proceeds to repay debt and maintain its net leverage ratio in the range of 3.5 to 4.0 times, repurchase shares to minimise earnings dilution, and fund core growth initiatives, including potential complementary acquisitions to its food care and product care divisions.

Sealed Air’s board of directors has authorised an increase of the share repurchase program by an additional $1.5 billion of Sealed Air common stock. With this increase, the total authorisation for future repurchases under the program is approximately $2.2 billion.

The board has also determined that Sealed Air will maintain its quarterly cash dividend of $0.16 per common share while the company reduces earnings dilution.

Following past practices, the board will continue to evaluate the quarterly cash dividend annually.

The sale of New Diversey is expected to close in the second half of 2017, and is subject to certain regulatory approvals and customary closing conditions.

The acquisition includes a formal offer to acquire certain of Diversey’s business in France and the Netherlands, which may be accepted following Works Council consultation.

The results of operations of New Diversey will be reported as discontinued operations beginning in the first quarter of 2017. Sealed Air is tentatively scheduled to report its first quarter 2017 results on May 9, 2017.

Citi is acting as financial advisor, and Skadden, Arps, Slate, Meagher & Flom LLP as legal advisor to Sealed Air.

Barclays and RBC Capital Markets LLC are serving as financial advisors and Kirkland & Ellis LLP is serving as legal counsel to Bain Capital Private Equity.

Credit Suisse and Goldman Sachs together with Barclays, BofA Merrill Lynch, HSBC, RBC Capital Markets, and SunTrust Robinson Humphrey are providing committed financing for the transaction.

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