W.R. Grace & Co. is selling its core business — its packaging division, which includes Cryovac — to Sealed Air Corp. in a deal valued at $5 billion in stock and cash.
A new publicly owned company, to be called Sealed Air, may be the world's largest protective and specialty packaging company, with sales of more than $2.5 billion. A Cryovac official estimated that firm's film sales last year at $900 million. Grace reported overall sales in 1996 of $3.5 billion. Sealed Air reported sales of about $800 million.
Current Grace shareholders will own 63 percent of the new packaging company, while Sealed Air shareholders will own the balance. Grace shareholders will receive $3.7 billion in Sealed Air common and convertible preferred shares. Sealed Air, in return, will pay the 11,000-employee Grace $1.2 billion in cash.
The tax-free transaction to both companies and shareholders will be completed in February. The deal was formed as a trust because shareholders own more than 50 percent of the stock and have more than 50 percent of the voting rights. The deal also insulates Cryovac from the potential asbestos liabilities of the specialty chemicals business.
Part of Grace's restructuring involves its specialty chemicals business. It will become a new publicly traded company that will be spun off to Grace shareholders. The new firm will consist of Grace Davison, a supplier of fluid cracking catalysts, silica-based polyolefin catalysts and silica gels; Grace Construction Products; and Darex Container Products, a supplier of container sealants and coatings. The company has annual sales of about $1.5 billion and will retain the Grace name. It will continue to be based in Boca Raton, Fla.
The transaction will be preceded by a $1.2 billion capital contribution from Cryovac to the new Grace specialty chemicals firm, which will use the cash to pay down substantially all of its debt.
This marks the end of an 18-month restructuring for Cryovac. In June, Grace Packaging moved its headquarters to Duncan, S.C. Earlier this year, the packaging division acquired Schurpack Inc. and divested its specialty polymers business.
The new Sealed Air will be based in Saddle Brook, N.J. All current officers of Sealed Air, as well as several executives of the current Grace packaging organization, will make up the seven officers of the new Sealed Air. Several nonmanagement directors from the current board of Grace will resign from the Grace board when the deal is complete.
While the companies do not have any product overlaps, Cryovac operates in 50 countries while Sealed Air is located in 27, instantly and considerably expanding Sealed Air's global presence .
Cryovac, which makes shrink, stretch and barrier films, supplies packaging materials and systems to preserve food. Other product lines include Omicron rigid plastic cups and tubs and Formpac foam trays.
Sealed Air employs 4,200.