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Sealed Air to acquire Diversey for $4.3 Billion
Sealed Air Corporation - maker of Bubble Wrap and Jiffy bags - and global cleaning and sanitisation product giant Diversey Holdings, announced yesterday that they have entered into a definitive agreement under which Sealed Air will acquire Diversey, in a transaction valued at $4.3 billion.
It is envisaged that the transaction will be completed in 2011 and it is expected to be accretive to earnings in the first full year following completion.
Under the terms of the agreement, Diversey shareholders will receive $2.1 billion in cash and an aggregate of 31.7 million shares of Sealed Air common stock valued at $25.68 per share based on Sealed Air's closing stock price on May 31, 2011 for a total equity consideration of $2.9 billion. Diversey is a privately-owned company, controlled by members of the Johnson family and Clayton, Dubilier & Rice (CD&R). Upon closing of the transaction, Diversey shareholders are expected to own approximately 15% of Sealed Air common stock.
Regular readers of Cleanzine will be aware that Diversey provides cleaning, sanitisation and hygiene solutions to industrial and retail customers in the food and beverage, food service, healthcare and lodging sectors, as well as to building service contractors worldwide. In 2010, it generated net sales of $3.1 billion and Adjusted EBITDA (earnings before interest, taxes, depreciation, and amortisation) of $453 million. The company employs more than 10,000 people worldwide and operates in more than 60 countries.
Sealed Air is a leading provider of food and industrial system solutions which help ensure that food retains its freshness, products arrive undamaged and transit efficiencies are maximised to reduce energy and waste. The company is focused on pioneering a differentiated, proprietary range of offerings in material science, automation technology and service-based solutions. It operates in 52 countries, employs more than 16,000 people and generated net sales of $4.5 billion in 2010.
Diversey operates in more than 60 countries and is a market leader in Europe, Asia Pacific, Turkey, Brazil, Africa and other high growth developing regions. Sealed Air will further reinforce its global footprint and will be uniquely positioned to capitalize on demand for improving hygiene and food safety standards in developing markets. On a pro forma basis, Sealed Air will have greater than 60% of its revenue generated outside of North America and 21% in developing regions.
Both Sealed Air and Diversey have a history of innovation - successfully developing market-leading solutions, services and technologies. Sealed Air has a robust development pipeline and has recently focused R&D resources developing new products and services that target the hygiene and food safety markets.
"This transaction represents a strategic growth opportunity that leverages Sealed Air's core competencies and positions our company to further capitalise on the megatrends that drive both businesses," says William V. Hickey, President and Chief Executive Officer of Sealed Air. "With Diversey, we will expand our footprint beyond specialty packaging solutions by gaining entry into a $40+ billion chemical cleaning and hygiene industry that has attractive fundamentals and is already in our value chain. This combination is also financially compelling, and we expect it to deliver enhanced earnings per share and free cash flow generation, creating meaningful value for our shareholders.
"Sealed Air and Diversey have shared values, overlapping customers and end markets, together with a common vision. By harnessing the strengths and sales capabilities of both companies, we will be able to bolster our solutions and services competencies and position Sealed Air for continued market leadership. We look forward to welcoming Diversey's talented employees to the Sealed Air team."
Edward F. Lonergan, Diversey President and Chief Executive Officer says " We are excited about the opportunities we have to grow with Sealed Air through increased scale and expanded reach.
"We share a culture of innovation and a global vision for our business. Like Sealed Air, Diversey is committed to sustainable solutions, both in terms of our business and in terms of helping our customers protect human health while reducing waste generation and consumption of natural resources. I am confident that this is a winning combination for our employees and customers around the world."
Diversey Chairman Helen Johnson-Leipold exp0lains further: "Diversey shareholders determined that the best long-term opportunity for all stakeholders was a combination with Sealed Air. This was a difficult decision, but the compelling rationale was that together, we can leverage our expertise to transform our industry more rapidly and in more ways than either company could do alone.
"As the companies got to know each other, the leaders discovered an alignment of values and shared passion for industry-transforming innovation and sustainable solutions. The businesses, the teams, and our ambitions mesh well. And I'm pleased that Sealed Air has committed to continuing a strong presence in Racine, Wisconsin, the historic base of operations for Johnson family businesses."
CD&R Partner Richard J. Schnall adds: "The operating improvements and growth initiatives we implemented with management under our ownership provide Diversey with a solid foundation for a rewarding future as an integral part of Sealed Air. Bringing the companies together will open the door to exciting new market opportunities and create a very strong global leader with broader capabilities to serve customers more effectively."
William V. Hickey will continue as President and Chief Executive Officer of Sealed Air. At the close of the transaction, Edward F. Lonergan, President and Chief Executive Officer of Diversey, and his team will join Sealed Air, and Mr. Lonergan will continue to lead the Diversey business.
Sealed Air plans to maintain Diversey's Americas business unit and R&D functions in Racine, Wisconsin and to continue Diversey's support and involvement in the Racine community.
The transaction will be financed with cash on hand and proceeds from committed debt financing provided by Citi. It is subject to the satisfaction of customary closing conditions, including applicable regulatory approvals.
2nd June 2011