Bubble Wrap maker Sealed Air has agreed to sell its cleaning and hygiene businesses for $3.2 billion to private-equity firm Bain Capital as its focuses on more profitable businesses.
The units to be sold will be called New Diversey and include Sealed Air’s Diversey Care division — which offers cleaning solutions for everything from commercial kitchens to on-premise laundries — and the food hygiene and cleaning business within the Food Care division.
Between them, the businesses employ about 8,600 people and generated net sales of approximately $2.6 billion in 2016. Sealed Air acquired Diversey in 2011 from the Johnson family and private equity firm Clayton, Dubilier & Rice for $4.3 billion.
On news of the sale to Bain Capital, Sealed Air’s stock fell 4% to $42.88. Jefferies analyst Philip Ng said many investors had likely expected a price closer to $3.5 billion.
Reuters reported that the deal would allow Sealed Air to focus on its food, product and medical packaging businesses, which include the Cryovac food packaging brand and Bubble Wrap.
“New Sealed Air … 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 CEO Jerome A. Peribere said in a news release.
The Diversey Care division accounts for about 29% of Sealed Air’s overall revenues. In October, the company had announced a plan to spin off the division and the food hygiene and cleaning business to shareholders.
Ken Hanau, a managing director at Bain Capital, noted Diversey’s “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.”
Sealed Air said it would use the proceeds from the sale to repay debt, repurchase shares to minimize earnings dilution, and “fund core growth initiatives, including potential complementary acquisitions to its Food Care and Product Care divisions.”