Sealed Air Corp. (SEE - Analyst Report) recently announced the acquisition of privately held Diversey Holdings Inc, a leading solutions provider to the global cleaning and sanitization market, for $4.3 billion. The acquisition might face resistance from large shareholders.
Davis Selected Advisers, the fund manager may have additional discussions with the issuer or third party regarding the possibilities of maximizing the issuer’s value. Davis is the largest stockholder of Diversey and holds 26.8% of the common stock.
Per the agreement, Sealed Air will pay Diversey $2.1 billion in cash and 31.7 million shares of its common stock valued at $25.68 per share based on Sealed Air’s closing stock price on May 31, 2011.
The purchase also includes $1.4 billion of net debt to be refinanced, for a total cost of $4.3 billion. Upon closure, Diversey shareholders are expected to own approximately 15% of Sealed Air common stock.
However, Sealed Air agreed to pay $2.9 billion to Diversey which, according to Bloomberg, represents a 52%-premium to Diversey shares. The transaction will be financed with cash on hand and proceeds from committed debt.
As of March 31, 2011, Sealed Air had cash and cash equivalents of $696 million, up from $676 million as of December 31, 2010. As of March 31, 2011, the company’s long-term debt stood at $1,398 million and the debt-to-capitalization ratio improved to 57% from 59% as of December 31, 2011.
The acquisition would bring outstanding opportunity according to Sealed Air as it intends to expand its presence beyond specialty packaging solutions by gaining access to a $40 billion chemical cleaning and hygiene industry.
The transaction is expected to generate approximately $30 million in total cost synergies in the first full year after completion, and approximately $50 million in the year after.
With this combination, Sealed Air will offer customers a broader array of products and services, including Diversey’s SmartDose dosing for cleaners, Optifill sealable prescription fulfillment systems, Taski Swingo XP floor cleaning equipment and Oxivir disinfectants.
The combined company will be positioned to meet customers’ growing demand, while simultaneously reducing customer costs through increased efficiencies.
Elmwood Park, New Jersey-based Sealed Air Corp. is a major specialty packaging services provider catering to a diverse set of end -markets. The company operates in the United States and in 50 other countries with packaging and performance-based materials and equipment systems under several market leading brands serving food, medical and an array of industrial and consumer applications.
The company reports its operations in four segments: Food Packaging, Protective Packaging, Food Solutions and the Other Category segment. Sealed Air competes with the likes of Bemis Company Inc. (BMS - Analyst Report), Sonoco Products Co. (SON - Analyst Report) and privately held Printpack Inc.