Sealed Air, the company perhaps best known for making bubble wrap, has entered in to a definitive agreement to sell its Diversey Care division and the food hygiene and cleaning business to US private equity group Bain Capital for about $3.2bn.
The North Carolina-based company bought sanitisation group Diversey Holdings in 2011 in a cash-and-stock deal that valued it at about $4.3bn. At the time experts had questioned why Sealed Air would pay a premium for the business.
Last year, Sealed Air’s chief executive Jerome Peribere had said the company was interested in spinning off New Diversey and that the company’s shareholders would have 100 per cent ownership of the common stock after the spin-off was completed.
Monday’s deal includes the Diversey Care division, which accounts for about 29 per cent of Sealed Air’s overall revenues, and the food hygiene operations within its Food Care division, the company’s largest unit, which have together been dubbed New Diversey. The new hygiene and cleaning solution company combined generated net sales of $2.6bn last year.
Sealed Air expects to use the proceeds of the transaction to repay debt, repurchase shares and fund core growth initiatives — including potential complementary acquisitions to its Food Care and Product Care divisions. The company’s board has authorised an increase of the share buyback program by an additional $1.5bn — bringing the total under the current program to about $2.2bn — in an effort to minimise earnings dilution.
The transaction, which is subject to regulatory approval, is expected to close in the second half of the year.
Citi is acting as financial adviser to Sealed Air, while Barclays and RBC Capital Markets are advising Bain. Sealed Air shares were up 1.2 per cent in pre-market trading.