Significant synergistic benefits are expected to be derived through Sealed Air’s US$4.3 billion acquisition of Diversey, which was announced last night Australian time. ‘The transaction is expected to be completed in 2011 and is expected to be accretive to earnings in the first full year following completion,’ stated the announcement.
Under the terms of the agreement, Diversey shareholders will receive US$2.1 billion in cash and an aggregate of 31.7 million shares of Sealed Air common stock valued at US$25.68 per share based on Sealed Air’s closing stock price on May 31, 2011 for a total equity consideration of US$2.9 billion. Diversey is a privately-owned company, controlled by members of the Johnson family and Clayton, Dubilier & Rice, LLC (“CD&R”). Upon closing of the transaction, Diversey shareholders are expected to own about 15% of Sealed Air common stock.
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. Lonergan will continue to lead the Diversey business.
Diversey provides cleaning, sanitisation and hygiene solutions to industrial and retail customers in the food and beverage, food service, health care, and lodging sectors, as well as to building service contractors worldwide. In 2010, Diversey generated net sales of US$3.1 billion and adjusted EBITDA of US$453 million. Diversey 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 that help ensure that food retains its freshness, products arrive undamaged, and transit efficiencies are maximised to reduce energy and waste. Sealed Air is focused on pioneering a differentiated, proprietary range of offerings in material science, automation technology and service-based solutions in order to provide comprehensive solutions to its customers. Sealed Air operates in 52 countries, employs more than 16,000 people and generated net sales of US$4.5 billion in 2010.
“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,” said Hickey.
“With Diversey, we will expand our footprint beyond specialty packaging solutions by gaining entry into a US$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.”
Hickey continued, “Sealed Air and Diversey have shared values, overlapping customers and end markets, and 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.”
Lonergan stated, “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.”