Divestiture and Acquisition Activity

12 Months Ended

Dec. 31, 2021

Business Combination and Asset Acquisition [Abstract]

Divestiture of Reflectix, Inc.

On November 1, 2021, the Company completed the sale of Reflectix, Inc. (“Reflectix”), a wholly-owned subsidiary that sells branded reflective insulation solutions, with operations located in Markleville, Indiana. The decision to sell this business was consistent with the Company's overall strategic priorities focused on packaging solutions. Reflectix was previously included within the Protective reporting segment.

The disposal does not represent a strategic shift that will have a major effect on our operations and financial results and therefore did not qualify as a discontinued operation.

The selling price of the business was $82.5 million, paid in cash received during the fourth quarter 2021. We recorded a $45.3 million pre-tax gain on the sale of the business, within Gain (Loss) on sale of businesses and property and equipment on the Consolidated Statements of Operations. The business had a net carrying value of $35.8 million, which included inventory of

$6.8 million, trade receivables of $6.6 million, property and equipment of $1.0 million, and goodwill of $23.2 million. The goodwill is not deductible for tax purposes. The assets were partially offset by accrued liabilities which were individually immaterial. We recorded $17.3 million in tax expense related to the gain from the sale of Reflectix within Income tax provision on the Consolidated Statements of Operations for the year ended December 31, 2021.

The sales price is subject to final and customary purchase price true-ups. We maintain no on-going investment or relationship that would result in the sold business becoming a related party.

Acquisition of Automated Packaging Systems, LLC

On August 1, 2019 the Company acquired 100% of the limited liability company interest in Automated Packaging Systems, LLC, formerly Automated Packaging Systems, Inc., a manufacturer of automated bagging systems. The acquisition is included in our Protective reporting segment. Automated Packaging Systems has provided opportunities to expand the Company's automated solutions and into adjacent markets.

Consideration paid for Automated Packaging Systems was $441.4 million in cash. The opening balance sheet included $58.2 million of assumed liabilities in connection with a deferred incentive compensation plan for Automated Packaging Systems' European employees. Of this amount, payments of $17.4 million, $19.0 million and $19.7 million were made during the years ended December 31, 2021, 2020 and 2019, respectively. Sealed Air is expected to make the remaining payment to the deferred incentive compensation plan participants in 2022.

The purchase price was primarily funded with proceeds from the incremental term facility provided for under an amendment to our Third Amended and Restated Credit Agreement, as described in Note 14, "Debt and Credit Facilities," of the Notes. For the years ended December 31, 2020 and 2019, transaction expenses recognized for the Automated Packaging Systems acquisition were $0.3 million and $3.3 million, respectively. These expenses are included within selling, general and administrative expenses in the Consolidated Statements of Operations.

The following table summarizes the consideration transferred to acquire Automated Packaging Systems and the allocation of the purchase price among the assets acquired and liabilities assumed, including measurement period adjustments recorded through the finalized purchase price allocation on August 1, 2020.


	Revised Preliminary Allocation		Measurement Period		Final Allocation
(In millions)	As of August 1, 2019		Adjustments		As of September 30, 2020
Total consideration transferred	$	445.7	$	(4.3)	$	441.4

Assets:
Cash and cash equivalents	16.0		(0.2)		15.8
Trade receivables, net	37.3		—		37.3
Other receivables	0.3		—		0.3
Inventories, net	40.7		(0.7)		40.0
Prepaid expenses and other current assets	2.3		—		2.3
Property and equipment, net	76.9		8.7		85.6
Identifiable intangible assets, net	81.1		(0.6)		80.5
Goodwill	261.3		(14.6)		246.7
Operating lease right-of-use-assets	—		4.3		4.3
Other non-current assets	24.7		1.1		25.8
Total assets	$	540.6	$	(2.0)	$	538.6
Liabilities:
Accounts payable	12.0		—		12.0
Current portion of long-term debt	2.6		(0.5)		2.1
Current portion of operating lease liabilities	—		1.5		1.5

Other current liabilities	56.2		(3.3)		52.9
Long-term debt, less current portion	4.3		(0.3)		4.0
Long-term operating lease liabilities, less current portion	—		2.8		2.8
Deferred taxes	—		0.5		0.5
Other non-current liabilities	19.8		1.6		21.4
Total liabilities	$	94.9	$	2.3	$	97.2

Measurement period adjustments recorded in the year ended December 31, 2020 through finalization of the purchase price allocation on August 1, 2020 were primarily a result of a favorable net working capital and purchase price settlement with the seller of $4.3 million during the first quarter of 2020.

The following table summarizes the identifiable intangible assets, net and their useful lives.


	Amount		Useful life
	(In millions)		(In years)
Customer relationships	$	28.9	13.0
Trademarks and tradenames	15.6		9.1
Capitalized software	2.4		3.0
Technology	29.6		6.4
Backlog	4.0		0.4
Total intangible assets with definite lives	$	80.5

Goodwill is a result of the expected synergies and cross-selling opportunities that this acquisition is expected to provide for the Company, as well as the expected growth potential in acquired automated and sustainable solutions. Goodwill allocated to Automated Packaging Systems' U.S. entities is deductible for tax purposes. Goodwill allocated to Automated Packaging Systems' foreign entities is not deductible for tax purposes. The goodwill balance associated with Automated Packaging Systems is included in the Protective reportable segment.

Other non-current assets at the opening balance sheet date included the net overfunded position of a closed defined benefit pension plan in the United Kingdom. Refer to Note 17, "Profit Sharing, Retirement Savings Plans and Defined Benefit Pension Plans," for additional information on the Company's other defined benefit pension plans.

In conjunction with the acquisition and subsequent integration of Automated Packaging Systems, the Company incurred restructuring charges. No restructuring accrual was included in our opening balance sheet as the liability did not exist at the time of acquisition. Refer to Note 12, "Restructuring Activities," for more detail on the Company's restructuring activity.

The inclusion of Automated Packaging Systems in our consolidated financial statements was not deemed material with respect to the requirement to provide pro forma results of operations in ASC 805. As such, pro forma information is not presented.

Other 2019 Acquisition Activity

During the second quarter of 2019, Food had acquisition activity resulting in a total purchase price paid of $23.4 million. The Company allocated the consideration transferred to the fair value of assets acquired and liabilities assumed, resulting in an allocation to goodwill of $6.0 million. The final purchase price adjustments resulting in an increase to goodwill of $0.3 million were recorded in the third quarter of 2019. Identifiable intangible assets acquired were not material.

Acquisitions Subsequent to December 31, 2021

On February 2, 2022, SEE acquired Foxpak Flexibles Ltd. (“Foxpak”), a privately-owned Irish packaging solutions company. Foxpak is a digital printing pioneer that partners with brands to deliver highly decorated packaging solutions; stand-up and spout pouches, and sachets that serve a variety of markets including food retail, pet food, seafood, and snacks. Established in 2001, Foxpak is located in Collon, Ireland. This transaction is not material to SEE’s financial results.