DEFM14A: Sealed Air to be Acquired by CD&R Affiliate for $42.15/Share

Sealed Air Corporation's Board unanimously recommends stockholders approve the $42.15 per share all-cash acquisition by Sword Purchaser, LLC, an affiliate of Clayton, Dubilier & Rice, LLC.

Summary

• Sealed Air Corporation (NYSE: SEE) is being acquired by Sword Purchaser, LLC and Sword Merger Sub, Inc., both affiliated with Clayton, Dubilier & Rice, LLC (CD&R).
• Stockholders will receive $42.15 in cash per share of Sealed Air common stock, without interest, less any applicable withholding taxes.
• The Board of Directors unanimously determined the merger is advisable and in the best interests of Sealed Air and its stockholders, recommending a 'FOR' vote on the merger agreement, the advisory compensation proposal, and the adjournment proposal.
• A special meeting of stockholders to vote on the merger is scheduled for February 25, 2026, at 8 a.m. Eastern time, to be held virtually.
• The merger requires the affirmative vote of holders of at least a majority of outstanding shares of Sealed Air common stock. As of January 16, 2026, 73,635,574 shares constitute a majority.
• Upon completion, Sealed Air common stock will be delisted from the NYSE and deregistered from the SEC.
• The total funds necessary to complete the merger and related transactions are approximately $10.6 billion, comprising $3.25 billion in equity financing from the CD&R Fund and $9.4 billion in debt financing commitments.

Sentiment

Score: 8

Explanation: The Board of Directors unanimously recommends the all-cash merger, which offers a substantial premium to recent unaffected share prices and provides liquidity and certainty of value to stockholders. Committed financing from a reputable private equity firm and a syndicate of banks underpins the transaction. While customary risks and potential delays are noted, the overall sentiment is positive for the completion of the acquisition.

Positives

• The all-cash merger consideration provides certainty of value and liquidity to stockholders, eliminating long-term business and execution risk.
• The merger consideration of $42.15 per share represents a premium of approximately 41% above the closing price on August 14, 2025 (the last trading day prior to the filing of a Form 13F by Investor A).
• The merger consideration represents a premium of approximately 24% above the 90-day volume-weighted average price per share on November 12, 2025 (the last trading day prior to published rumors about a potential transaction).
• The Board of Directors believes the Merger Consideration is more favorable than the potential value that might have resulted from other alternatives, including remaining a standalone public company or a potential sale of its Protective business.
• A 'go-shop' period allowed for the solicitation and evaluation of potential strategic alternatives, including outreach to 29 third parties, but did not result in a Superior Proposal.
• The Board believes it negotiated the most favorable terms Parent was willing to offer, with the price per share increased from Parent's original proposal.
• Evercore Group L.L.C. rendered an oral opinion, subsequently confirmed in writing, that the Merger Consideration is fair, from a financial point of view, to stockholders.
• The Merger Agreement permits the Board of Directors to respond to unsolicited Acquisition Proposals under certain specified circumstances.
• Stockholders who do not vote to adopt the Merger Agreement and properly follow prescribed procedures are entitled to dissent from the merger and demand appraisal rights.
• CD&R's reputation, history of successful acquisitions, and deep experience in the industrial and packaging industries, coupled with the extensiveness of its evaluation, suggest a high likelihood of completing the merger.
• Committed equity financing of $3.25 billion and debt financing commitments of $9.4 billion provide sufficient funds for the merger.
• The Merger Agreement includes a Parent Termination Fee of $425,993,930 payable to Sealed Air under certain circumstances if Parent fails to complete the merger.
• Sealed Air has sufficient operating flexibility to conduct its business in the ordinary course prior to the consummation of the Merger.
• The End Date of November 16, 2026, allows for sufficient time to complete the Merger.

Negatives

• Sealed Air will no longer exist as an independent, publicly traded company, and stockholders will not participate in any future earnings or potential growth.
• There is a possible diversion of management focus and resources from operational matters and other strategic opportunities while working to consummate the Merger.
• The pendency of the transaction could have a negative effect on Sealed Air's businesses, including relationships with employees, customers, and suppliers, and may lead to the loss of key personnel.
• There is a risk that the Merger may not be completed or may be delayed, even if stockholder approval is obtained, due to unmet closing conditions, including regulatory approvals.
• Under the terms of the Merger Agreement, Sealed Air is prohibited from soliciting other Acquisition Proposals following the expiration of the Go-Shop Period (other than an additional 15-day period for qualifying parties).
• Sealed Air may be required to pay a Company Termination Fee of $205,108,189 (or $94,665,318 under specific circumstances) if the Merger Agreement is terminated under certain conditions.
• If Parent fails to complete the Merger or breaches the agreement, Sealed Air's remedies may be limited to the Parent Termination Fee, Enforcement Costs, and certain reimbursement obligations, which may be inadequate.
• There is a risk that the Debt Financing may not be obtained, potentially resulting in Parent and Merger Sub not having sufficient funds to complete the transactions, although Parent's obligation is not conditioned on financing receipt.
• The maximum aggregate monetary liability for Parent, Merger Sub, or their affiliates for breaches under the Agreement, Guaranty, or Equity Commitment Letter is capped at the Parent Termination Fee plus Enforcement Costs and certain expenses.
• Regulatory clearances, approvals, and consents are required in the United States and a number of foreign jurisdictions, which presents a risk of delay or non-obtainment.
• Restrictions are placed on the conduct of Sealed Air's business prior to the Closing, including limitations on dividends (other than regular quarterly cash dividends of $0.20 per share) and other business opportunities.
• The all-cash transaction will be taxable to U.S. Holders for U.S. federal income tax purposes.
• There is a risk that Sealed Air's stock price may decline significantly if the Merger is not consummated.
• Sealed Air's directors and officers may have interests in the Merger that may be different from, or in addition to, those of stockholders generally.
• Significant costs are involved in connection with entering into the Merger Agreement and completing the Merger, some of which are payable regardless of whether the Merger is completed.

Risks

• The timing, receipt, and terms and conditions of any required governmental and regulatory approvals of the Merger could reduce anticipated benefits or cause the parties to abandon the Merger.
• The possibility that the Sealed Air Stockholders may not approve the Merger.
• The occurrence of any event, change, or other circumstance that could give rise to the termination of the Merger Agreement.
• The risk that the parties to the Merger Agreement may not be able to satisfy the conditions to the Merger in a timely manner or at all.
• The failure by Parent and Merger Sub to obtain the Debt Financing on the terms set forth in the Debt Commitment Letter, or any difficulties of Parent in obtaining any necessary financing for the Merger, including as a result of uncertainty or adverse developments in the credit and capital markets or otherwise.
• The risk of any litigation relating to the Merger.
• The risk that the Merger and its announcement could have an adverse effect on the ability of Sealed Air to retain customers and retain and hire key personnel and maintain relationships with customers, suppliers, employees, stockholders, and other business relationships and on Sealed Air's operating results and business generally.
• The risk that the Merger and its announcement could have adverse effects on the market price of the Sealed Air common stock.
• The possibility that the parties to the Merger may not achieve some or all of any anticipated benefits with respect to Sealed Air's business and the Merger may not be completed in accordance with the parties' expected plans or at all.
• The risk that restrictions on Sealed Air's conduct during the pendency of the Merger may impact Sealed Air's ability to pursue certain business opportunities.
• The possibility that the Merger may be more expensive to complete than anticipated, including as a result of unexpected factors or events.
• The occurrence of any event, change, or other circumstance that could give rise to the termination of the Merger Agreement, including in circumstances requiring Sealed Air to pay the Company Termination Fee.
• The risk that Sealed Air's stock price may decline significantly if the Merger is not consummated.
• Sealed Air's ability to raise capital and the terms of those financings.
• The risk posed by legislative, regulatory, and economic developments affecting Sealed Air's business.
• General economic and market developments and conditions, including with respect to federal monetary policy, federal trade policy, sanctions, export restrictions, interest rates, interchange rates, labor shortages, supply chain issues, changes in raw material pricing and availability, energy costs, and environmental matters.
• Changes in consumer preferences and demand patterns that could adversely affect Sealed Air's sales, profitability, and productivity.
• The effects of animal and food-related health issues on Sealed Air's business.

Future Outlook

Management has prepared updated long-range financial projections for 2025 through 2028, reflecting its latest views on Sealed Air's businesses, transformation initiatives, and market outlook. These projections incorporate assumptions for more fully realized execution of growth and cost reduction initiatives, leading to greater projected net sales, Adjusted EBITDA, and Free Cash Flow for 2026, 2027, and 2028 compared to previous forecasts. The merger is anticipated to be completed in mid-2026, subject to the timely satisfaction of closing conditions.

Management Comments

• Henry R. Keizer, Chair of the Board of Directors, expressed gratitude for stockholder support and consideration of these matters.
• Dustin Semach, President and Chief Executive Officer, engaged in discussions with potential acquirers and resolved open points in the Merger Agreement.

Industry Context

Sealed Air operates in a highly competitive packaging industry, having experienced declining revenue and margin growth in 2022 and 2023, which prompted a comprehensive strategic review and transformation initiatives. The Protective business segment has faced significant challenges, including a substantial multi-year reduction in purchasing by a major customer. The Food business is also exposed to cyclical factors like beef cattle cycles, regulatory changes, and shifts in consumer behavior. The Board considered the limited synergies and potential negative stockholder reaction to a stock-based transaction with a competitor (Company B), noting a previous acquisition in the industry (Company A) where the buyer's share price declined significantly post-announcement.

Comparison to Industry Standards

• Evercore's financial analysis compared Sealed Air's financial performance and stock market trading multiples with those of selected publicly traded companies in the Packaging industry, including Amcor plc, Ball Corporation, Crown Holdings, Inc., Graphic Packaging Holding Company, SIG Group AG, Silgan Holdings Inc., and Sonoco Products Company.
• Evercore reviewed financial information related to selected transactions involving target companies in the packaging industry and other packaging companies with similar revenue growth profiles announced since December 2017.
• A Premiums Paid Analysis was conducted, reviewing all-cash transactions greater than $5 billion, all-cash take-private transactions greater than $5 billion, and industrials all-cash transactions greater than $2.5 billion, as well as leveraged buyout transactions greater than $3 billion.
• The Merger Consideration of $42.15 per share was compared against various valuation ranges derived from analyses such as Discounted Cash Flow ($32.87 to $51.19), Selected Public Company Trading ($33.97 to $41.52), Selected Transactions ($33.82 to $41.34), Premiums Paid ($37.30 to $40.28), Leveraged Buyout ($36.92 to $45.39), and Present Value of Future Share Price (Standalone Scenario: $34.29 to $45.09; Separation Scenario: $35.99 to $43.10).

Management Changes

Corporate Governance

Legal Proceedings

• No pending or threatened written legal proceedings against Sealed Air or its properties that would reasonably be expected to have a Company Material Adverse Effect.
• No unsatisfied judgments or open injunctions binding upon Sealed Air that would reasonably be expected to have a Company Material Adverse Effect.
• Sealed Air is required to keep Parent reasonably informed about any stockholder litigation related to the transactions and allow Parent to participate in the defense (at Parent's expense), with settlement requiring Parent's consent.

Related Party Transactions

• Sword Purchaser, LLC and Sword Merger Sub, Inc. are affiliated with Clayton, Dubilier & Rice, LLC (CD&R).
• The CD&R Fund has provided an aggregate equity commitment of $3.25 billion to Parent and a limited guarantee for certain liabilities and obligations of Parent and Merger Sub under the Merger Agreement, capped at $435,993,930.
• A CD&R portfolio company owned a significant ownership stake in the general partner of Investor A, an activist investment firm that contacted Sealed Air. CD&R stated it had no role or non-public information regarding Investor A's activities.

Stakeholder Impact

• Shareholders will receive a cash payment of $42.15 per share, providing immediate liquidity and a premium over recent market prices, but will no longer have equity ownership in a publicly traded company or participate in future growth.
• Employees who continue employment (Continuing Employees) will receive comparable base salary/hourly wage, target cash bonus/commission opportunities, and aggregate employee benefits for 12 months post-merger.
• Executive officers may receive severance payments and accelerated vesting of equity awards upon a qualifying termination of employment.
• There is a potential for negative effects on relationships with customers and suppliers due to the pendency of the transaction.
• Existing indebtedness of Sealed Air will be repaid or refinanced as part of the merger, impacting creditors.
• Management may engage in discussions with Parent regarding future employment with the Surviving Corporation.

Next Steps

• Hold a Special Meeting of stockholders on February 25, 2026, to vote on the adoption of the Merger Agreement, the advisory compensation proposal, and the adjournment proposal.
• Solicit additional proxies if necessary or appropriate to obtain sufficient votes for the adoption of the Merger Agreement.
• Work towards completing the Merger in mid-2026, assuming timely satisfaction of necessary closing conditions.
• Upon completion of the Merger, Sealed Air's securities will be delisted from the NYSE and deregistered under the Exchange Act.
• Parent and Merger Sub will use reasonable best efforts to arrange and obtain the Debt Financing.
• Sealed Air will cooperate with Parent in connection with the arrangement of the Debt Financing, including furnishing required information and making management available.
• Sealed Air is required to deliver payoff letters and take other actions to facilitate the prepayment, termination, or redemption of certain existing indebtedness.
• Parent will cause the Surviving Corporation to indemnify and maintain directors and officers liability insurance for Indemnified Persons for a period of six years from the Effective Time.
• Parent will cause the Surviving Corporation to provide Continuing Employees with a base salary or hourly wage rate, short-term cash bonus or commission opportunities, and aggregate employee benefits that are no less favorable for a period of 12 months following the Effective Time.

Key Dates

Recommendation

The Board of Directors unanimously recommends the all-cash merger, which offers a substantial premium (41% over unaffected price, 24% over 90-day VWAP) and certainty of value. The 'go-shop' period did not yield a superior proposal, and Evercore's fairness opinion supports the financial terms. Committed financing and the board's thorough process suggest a high likelihood of completion. For existing shareholders, holding is appropriate to receive the cash consideration. For investors who can acquire shares below $42.15, a 'buy' recommendation for arbitrage purposes would be applicable.

Keywords

Merger, Acquisition, Sealed Air Corporation, SEE, Clayton Dubilier & Rice, CD&R, Private Equity, Packaging Solutions, Cash Acquisition, Proxy Statement, Shareholder Vote, NYSE Delisting, Debt Financing, Equity Financing, Corporate Governance, Risk Management, Appraisal Rights, Executive Compensation