Acquisition of Diversey Holdings, Inc.

9 Months Ended

Sep. 30, 2011

Acquisition of Diversey Holdings, Inc. [Abstract]

Acquisition of Diversey Holdings, Inc.

(3) Acquisition of Diversey Holdings, Inc.

     On October 3, 2011, we completed the acquisition of Diversey, a leading solutions provider to the global cleaning and sanitation market. Under the terms of the acquisition agreement, we paid in aggregate, $2.1 billion in cash consideration and an aggregate of 31.7 million shares of Sealed Air common stock, to the shareholders of Diversey. We financed the payment of the cash consideration through (a) borrowings under our new Credit Facility, (b) proceeds from our issuance of the Notes and (c) cash on hand. In connection with the acquisition, we also used our new borrowings to retire approximately $1.5 billion of existing indebtedness of Diversey. As of December 31, 2010, Diversey had 10,000 employees and net sales of $3.1 billion.

     See Note 9, “Debt and Credit Facilities,” for information about our new Credit Facility and the Notes issuance.

     On October 3, 2011, prior to the closing of the acquisition, we used cash on hand in the amount of $263 million to purchase preferred stock of Diversey (the “Preferred Stock Issuance”). Diversey elected to exercise its covenant defeasance option with respect to its 10.50% senior notes due 2020 (the “DHI Notes”), and Diversey, Inc. elected to exercise its covenant defeasance option with respect to its 8.25% senior notes due 2019 (the “DI Notes”). In addition, Diversey elected to redeem 35% of the aggregate accreted value of the DHI Notes using a portion of the proceeds of the Preferred Stock Issuance, and Diversey, Inc. elected to redeem 35% of the aggregate principal amount of the DI Notes using a portion of the proceeds of the Preferred Stock Issuance that had been contributed to the equity capital of Diversey, Inc. Each such redemption occurred on November 2, 2011 (the “Equity Claw Redemption Date”).

     On the Equity Claw Redemption Date, 35% of the DHI Notes were redeemed at a price of 110.50% of their accreted value, plus accrued and unpaid interest to the Equity Claw Redemption Date. Additionally, 35% of the DI Notes were redeemed at a price of 108.25% of their principal amount, plus accrued and unpaid interest to the Equity Claw Redemption Date. Following the completion of these redemptions Diversey and Diversey, Inc. notified the Depository Trust Company and Wilmington Trust, (the “Trustee”), that they will be redeeming the remaining 65% of the DHI Notes and the DI Notes pursuant to the make-whole redemption provisions of the indentures governing the DHI Notes and the DI Notes. Each such redemption is expected to occur on December 2, 2011.

     Our consolidated financial statements included in this report cover periods before the closing of the acquisition of Diversey and the consummation of other transactions related to the acquisition. Accordingly, while we have taken actions and incurred $31 million of costs related to the acquisition and $6 million of gains related to certain foreign currency forward contracts we entered into in contemplation of the closing of the acquisition, which are reflected in our consolidated financial statements as of and for the nine months ended September 30, 2011, our consolidated financial statements do not reflect the significant future impact that the acquisition and the related transactions will have on our consolidated financial condition and results of operations.

     We have not yet completed our analysis of the acquisition method of accounting for the Diversey acquisition, and we are currently in the process of finalizing independent appraisals and valuations of fair value of the assets acquired and liabilities assumed in order to supply pro forma financial information. The financial statements required by Item 9.01(a) of Form 8-K and the pro forma financial statements required by Item 9.01(b) of Form 8-K will be filed with the SEC within 75 calendar days (mid-December 2011) after the date on which the acquisition was completed.