Dive Brief:

• Sealed Air has entered a definitive agreement to be acquired by funds affiliated with private equity firm CD&R for an estimated $6.2 billion, based on a price of $42.15 per share in cash. The transaction has an overall enterprise value of $10.3 billion, according to a release.
• The deal, which was approved by Sealed Air’s board of directors, could close by mid-2026 pending regulatory clearances and shareholder approval. Sealed Air would be delisted from the New York Stock Exchange and become a private company.
• The agreement allows Sealed Air to actively solicit additional acquisitions offers during a 30-day period that will expire at the end of Dec. 16.

Dive Insight:

This deal would be the latest in a series of large packaging transactions in recent years as the sector weathers shifting economic factors. 

The North Carolina-based company — known for its brand names such as Autobag, Bubble Wrap, Cryovac and Liquibox — employs an estimated 16,400 people servicing customers in multiple countries. The company generated approximately $5.4 billion in sales last year, with a focus on food and protective packaging. 

Sealed Air is in the midst of a multiyear turnaround plan, including multiple CEO changes since late 2023, cost reduction efforts and a refocused strategy. It has been affected by shifting trends in e-commerce packaging, cost-pressured consumers, a decline in beef production and other factors. Henry Keizer, chairman of Sealed Air’s board of directors, noted in a statement that this decision was the result of a yearlong review of strategic alternatives. 

During the company’s latest earnings call, CEO Dustin Semach said volumes in the protective segment were starting to see their first positive inflection point since 2021 though sales were still down year over year. Food packaging sales were up year over year, though affected by various economic trends. Sealed Air reported nearly $3.96 billion in net sales through Q3, down 1.5%, and increased its full-year guidance to an upper range of $5.325 billion.

Speculation has been growing about whether the company could sell, or possibly split up into different parts, based on initial reporting by The Wall Street Journal. Analysts from RBC Capital Markets and Truist Securities cited pressure from activist investor Ancora Alternatives, first reported by Semafor, as a possible contributing factor. RBC Equity Analyst Arun Viswanathan noted on Nov. 13 that the food business could be the higher valued of the two and said overall the company had been “executing well” under stabilized leadership.

The current proposed deal would see Sealed Air’s assets remain together.

“This transaction delivers significant and derisked value to Sealed Air stockholders while accelerating our ongoing transformation. CD&R’s partnership will enhance our ability to invest in growing our Food and Protective businesses while maintaining a customer-first approach,” said Semach in a statement that also noted the potential for “more rapid innovation, expanded capabilities and broader reach.”

Rob Volpe, a partner at CD&R, said in statement that Sealed Air is “an exceptional global business with a talented leadership team, leading franchises and attractive underlying fundamentals.”

Michael Roxland, senior paper and packaging analyst at Truist, said in a Nov. 17 note that the announced deal terms were lower than some had been expecting and flagged implications of the go-shop period.

“Given the valuation relative to investor expectations and the ‘go-shop’ period, we don’t believe this is a done deal just yet with the potential for another bidder to come over the top,” he wrote.

Once the go-shop period expires, Sealed Air would have until the end of the year to negotiate a definitive agreement with another party. The proposed deal terms would require Sealed Air to pay an entity affiliated with CD&R a $94.67 million termination fee, based on certain conditions, if its board chooses to change or terminate the agreement in a favor of an alternative proposal.

The agreement also includes a higher termination fee if Sealed Air were to opt out of the agreement at a later date, before stockholder approval, as well as terms for CD&R’s affiliate to pay a termination fee if it backed out of the deal for certain reasons.

CD&R previously invested in the packaging sector through the 2023 purchase of Veritiv, which took the company private in a $2.6 billion deal. Veritiv has scaled through multiple acquisitions since then, including the 2024 purchase of Orora Packaging Solutions.

Private equity investors have been very active in industrials recently, including in the packaging sector. This includes Apollo-backed Novolex acquiring publicly traded Pactiv Evergreen for $6.7 billion earlier this year.