Sealed Air LBO Advances With $4.5 Billion Loan Package
Financing is a key step in the planned $10.3 billion takeover by private equity firm Clayton, Dubilier & Rice, signaling growing confidence in the deal.
A consortium of banks is preparing a $4.5 billion loan package to help fund the leveraged buyout of Sealed Air Corp. (SEE), the maker of Bubble Wrap, by private equity firm Clayton, Dubilier & Rice. The move marks a significant step forward in solidifying the financing for the proposed $10.3 billion transaction, signaling growing confidence among lenders in one of the year's larger take-private deals.
The financing is a crucial component of the roughly $7.9 billion in total debt being committed by a syndicate of Wall Street banks to support the acquisition. The deal, announced earlier this month, values Sealed Air at approximately $42.15 per share, an all-cash offer that represented a 41% premium over the company's unaffected stock price before buyout speculation began to circulate.
Shares of Sealed Air have been trading near their 52-week high as investors priced in the likelihood of the deal's completion. The stock was trading at $43.60 on Tuesday morning, slightly above the proposed acquisition price, suggesting some investors may be anticipating a successful close or holding out for a competing offer.
Sealed Air, headquartered in Charlotte, North Carolina, is a global leader in the packaging industry, known for its iconic Cryovac food packaging and Bubble Wrap cushioning. The take-private deal by CD&R is intended to allow the company to pursue long-term strategic initiatives away from the quarterly pressures of public markets.
For CD&R, securing the debt commitment is a critical de-risking milestone. Leveraged buyouts rely on using a significant amount of borrowed money to meet the cost of acquisition, and the willingness of banks to lend such a substantial sum underscores their faith in the stability of Sealed Air's cash flows and the strategic rationale behind the deal.
However, the infusion of debt has drawn scrutiny from credit rating agencies. S&P Global Ratings placed Sealed Air's 'BB+' credit rating on CreditWatch with negative implications, citing expectations of increased leverage that could be sustained above 5x EBITDA under a more aggressive financial policy typical of private equity ownership.
Equity analysts have offered a mixed but largely pragmatic reaction. Following the surge in the company's stock, Stifel downgraded Sealed Air from "Buy" to "Hold," noting that the current share price reflects the deal's value and offers limited further upside. Similarly, BofA Securities suspended its rating, stating the stock was no longer trading on fundamentals. The consensus analyst target price for the company stands at $45.12.
Under the terms of the agreement, Sealed Air will become a privately held company and its shares will be delisted from the New York Stock Exchange. The deal includes a 30-day "go-shop" period, which allows the company and its advisors to solicit alternative acquisition proposals from other parties. While this clause leaves the door open for a higher bid, the substantial financing package being assembled for the CD&R offer makes it a formidable frontrunner.
The transaction is expected to close in mid-2026, subject to customary closing conditions, including approval by Sealed Air shareholders and the receipt of regulatory approvals. Until then, the market will be closely watching for any potential competing bids and further developments in the financing that will take one of the packaging industry's most recognizable names private.