Proposed Acquisition of Diversey Holdings, Inc.

6 Months Ended

Jun. 30, 2011

Proposed Acquisition of Diversey Holdings, Inc. [Abstract]

Proposed Acquisition of Diversey Holdings, Inc.

(3) Proposed Acquisition of Diversey Holdings, Inc.

     On May 31, 2011, we entered into a definitive agreement to acquire Diversey Holdings, Inc. in a transaction valued at approximately $4.3 billion. Pursuant to the terms of the agreement, Diversey stockholders will receive an aggregate of approximately $2.1 billion in cash (subject to certain adjustments) and 31.7 million shares of our common stock, which valued at $25.68 per share based on our closing stock price on May 31, 2011, results in a total equity consideration of $2.9 billion and the refinancing of $1.4 billion of Diversey net debt. Upon closing of the transaction, Diversey stockholders are expected to own approximately 15% of our diluted common shares outstanding.

     Our consolidated financial statements as of and for the six months ended June 30, 2011 cover periods before the closing of the proposed acquisition and the consummation of the other transactions related to the proposed acquisition. Accordingly, while we have taken actions and incurred $6.6 million of costs related to the proposed acquisition that are reflected in our consolidated financial statements as of and for the six months ended June 30, 2011, our consolidated financial statements do not reflect the significant future impact that the proposed acquisition and the related transactions will have on us, our consolidated financial position and our results of operations.

     We have committed financing in place to fund all of the cash consideration of the transaction and refinance substantially all existing indebtedness at Diversey. Citigroup Global Markets, Inc. and its affiliates, Bank of America, N.A., BNP Paribas and the Royal Bank of Scotland plc made several (and not joint) commitments to provide 50%, 25%, 12.5% and 12.5% respectively, on the principal amount of senior secured credit facilities including a $750 million equivalent term loan A credit facility (“Term Loan A Facility “), a $1.55 billion equivalent term loan B credit facility (“Term Loan B Facility”), and a $700 million equivalent revolving credit facility (“Revolving Credit Facility”), as well as a $1.5 billion equivalent senior unsecured bridge facility (“Bridge Facility”), on the terms and subject to the conditions set forth in an amended and restated debt commitment letter dated June 17, 2011. The proceeds of the Term Loan A and B Facilities and the Bridge Facility may be used on the closing date of the acquisition to pay a portion of the aggregate cash consideration, refinance certain indebtedness and to pay related fees and expenses. The proceeds under the Revolving Credit Facility are expected to be used to finance working capital needs, general corporate purposes including the payment of the amounts required upon effectiveness of the Settlement agreement and, if necessary, fees and expenses associated with the acquisition and original issue discount, if any. We anticipate that our current global credit facility and European credit facility will be refinanced with the proposed financing discussed above. See Note 9, “Debt and Credit Facilities,” for a description of our current credit facilities.

     The merger agreement contains certain termination rights for both us and Diversey and further provides that, upon termination of the merger agreement in the event that the financing for the transaction is not obtained, we will be required to pay Diversey a cash termination fee of $160 million.

     As mentioned above, we will be issuing 31.7 million shares of Sealed Air common stock to certain stockholders of Diversey. These shares will be issued in a private placement exempt from the registration requirements of the Securities Act of 1933, as amended (the “Securities Act”). Such shares of common stock have not been and will not be registered under the Securities Act and may not be offered or sold in the United States absent registration or an applicable exemption from the registration requirements of the Securities Act. We are required to file a shelf registration statement with the SEC on or prior to the closing of the acquisition to provide for the offer and resale of our shares of common stock received by Diversey stockholders and option holders in the acquisition.

     The proposed acquisition has been granted early termination under the U.S. Hart-Scott-Rodino Antitrust Improvements Act of 1976 and has also received regulatory clearance from the European Commission under the European Union Merger Regulation. The proposed acquisition is still subject to the satisfaction of customary closing conditions and certain foreign regulatory approvals, which are in process. We have begun the integration planning process and expect the acquisition to close in the fourth quarter of 2011 following the receipt of all remaining regulatory approvals and the satisfaction of all of the closing conditions.