424B4 1 tm2035458-17_424b4.htm 424B4 tm2035458-17_424b4 - none - 36.1095665s
 Filed Pursuant to Rule 424(b)(4)
 Registration Statement No. 333-253676
46,153,846 Ordinary Shares
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Diversey Holdings, Ltd.
This is an initial public offering of ordinary shares of Diversey Holdings, Ltd.
Prior to this offering, there has been no public market for our ordinary shares. The initial public offering price per share is $15.00. Our ordinary shares have been approved for listing on the NASDAQ Global Select Market under the symbol “DSEY.”
See “Risk Factors” beginning on page 21 to read about factors you should consider before buying our ordinary shares.
Immediately after this offering, investment funds controlled by Bain Capital Private Equity will own approximately 77.7% of our outstanding ordinary shares (or approximately 76.0% of our outstanding ordinary shares if the underwriters’ option to purchase additional shares is exercised in full). As a result, we expect to be a “controlled company” within the meaning of the corporate governance standards of NASDAQ. See “Management — Corporate Governance — Controlled Company Status.”
Neither the Securities and Exchange Commission nor any other regulatory body has approved or disapproved of these securities or passed upon the accuracy or adequacy of this prospectus. Any representation to the contrary is a criminal offense.
Per Share
Total
Initial public offering price
$ 15.00 $ 692,307,690
Underwriting discount(1)
$ 0.7125 $ 32,884,615
Proceeds, before expenses, to Diversey Holdings, Ltd
$ 14.2875 $ 659,423,075
(1)
See “Underwriting (Conflict of Interest)” for a description of compensation payable to the underwriters.
To the extent that the underwriters sell more than 46,153,846 ordinary shares, the underwriters have the option to purchase up to an additional 6,923,076 ordinary shares at the initial public offering price less the underwriting discount.
The underwriters expect to deliver the ordinary shares to purchasers on March 29, 2021.
Citigroup
Morgan Stanley
Barclays
J.P. Morgan
BofA Securities
Credit Suisse
Goldman Sachs & Co. LLC
Jefferies
RBC Capital Markets
UBS Investment Bank
Baird
Guggenheim Securities
Siebert Williams Shank
Prospectus dated March 24, 2021
 

   
   
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TABLE OF CONTENTS
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F-1
Neither we nor any of the underwriters have authorized anyone to provide any information or make any representations other than those contained in this prospectus or in any free writing prospectus filed with the Securities and Exchange Commission (the “SEC”). We take no responsibility for, and can provided no assurance as to the reliability of, any other information that others may give you. We are offering to sell, and seeking offers to buy, ordinary shares only in jurisdictions where offers and sales are permitted. The information contained in this prospectus is accurate only as of the date of this prospectus, regardless of the time of delivery of this prospectus or of any sale of the ordinary shares. Our business, financial condition, results of operations, and prospects may have changed since such date.
For investors outside of the United States, neither we nor any of the underwriters have done anything that would permit this offering or possession or distribution of this prospectus in any jurisdiction where action for that purpose is required, other than in the United States. You are required to inform yourselves about, and to observe any restrictions relating to, this offering and the distribution of this prospectus outside of the United States.
No offer or invitation to subscribe for any securities may be made to the public in the Cayman Islands.
We are not licensed to conduct investment business in the Cayman Islands by the Cayman Islands Monetary Authority and this prospectus does not constitute an offer to members of the public of our ordinary shares, whether by way of sale or subscription, in the Cayman Islands. Our ordinary shares have not been offered or sold, will not be offered or sold and no invitation to subscribe for our common shares will be made, directly or indirectly, to members of the public in the Cayman Islands.
 
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Trademarks and Service Marks
This prospectus includes our trademarks and service marks which are protected under applicable intellectual property laws and are the property of Diversey Holdings, Ltd. or its subsidiaries. This prospectus also contains trademarks, service marks, trade names and copyrights, of other companies, which are the property of their respective owners. Solely for convenience, trademarks and trade names referred to in this prospectus may appear without the ® or ™ symbols, but such references are not intended to indicate, in any way, that we will not assert, to the fullest extent under applicable law, our rights or the right of the applicable licensor to these trademarks and trade names. We do not intend our use or display of other parties’ trademarks, trade names or service marks to imply, and such use or display should not be construed to imply, a relationship with, or endorsement or sponsorship of us by, these other parties.
Basis of Presentation
On September 6, 2017, Diamond (BC) B.V. (“Diamond”), our subsidiary and a private limited liability company incorporated under the laws of the Netherlands, acquired the Diversey Care division and the food hygiene and cleaning business of Sealed Air Corporation (the “Predecessor Diversey Business” or “Predecessor”), including certain assets and all of the capital stock of certain entities engaged in such businesses (the “2017 Acquisition”), pursuant to a purchase agreement entered into on March 25, 2017 between Sealed Air Corporation and Diamond. The purchase price for the 2017 Acquisition was funded by (i) an indirect equity contribution of $850.0 million into Diamond by certain investment funds controlled by Bain Capital Private Equity and its affiliates (collectively, “Bain Capital”) (ii) proceeds from borrowings under senior secured credit facilities, including a $900.0 million term loan facility and a €970.0 million term loan facility (together, the “Term Loan Facility”) and a $250.0 million revolving credit facility (the “Revolving Credit Facility,” and together with the Term Loan Facility, the “Senior Secured Credit Facilities”) and (iii) proceeds from the issuance of €450.0 million aggregate principal amount of 5.625% senior notes due 2025 (the “Senior Notes”). The Senior Secured Credit Facilities and the Senior Notes are more fully described in “Description of Certain Indebtedness.”
Diversey Holdings, Ltd. (the “issuer”) was formed on November 3, 2020 for the purpose of completing the offering contemplated by this prospectus and related transactions in order to carry on the business of Constellation (BC) 2 S.a.r.l. (“Constellation”) and its subsidiaries. In connection with the consummation of this offering, we will effect certain reorganization transactions. See “Reorganization Transactions” for a description of the Reorganization Transactions and diagrams depicting our existing corporate structure and our anticipated corporate structure after giving effect to the Reorganization Transactions, including this offering.
Unless the context requires otherwise, references in this prospectus to the “Company,” “we,” “us,” “our,” and “Diversey” ​(i) for periods through September 6, 2017, refer to the Predecessor Diversey Business, (ii) for periods from September 6, 2017 until prior to the Reorganization Transactions, refer to Constellation and its subsidiaries, and (iii) after giving effect to the Reorganization Transactions, refer to the issuer and its consolidated subsidiaries. The financial results of Constellation and its subsidiaries will be consolidated in the financial statements of the issuer following this offering. Following the completion of this offering, the issuer will be a holding company, and its principal asset will be equity of Constellation. Accordingly, following the completion of this offering, we intend to include the financial statements of the issuer in our periodic reports and other filings as required by applicable law and the rules and regulations of the SEC.
 
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PROSPECTUS SUMMARY
This summary highlights selected information contained elsewhere in this prospectus. This summary does not contain all of the information that you should consider before investing in our ordinary shares. For a more complete understanding of us and this offering, you should read and carefully consider the entire prospectus, including the more detailed information set forth under “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our consolidated financial statements and the related notes. Some of the statements in this prospectus are forward-looking statements. See “Forward-Looking Statements.”
Our Business
Our Mission.    Diversey’s mission is to protect and care for people through leading hygiene, infection prevention and cleaning solutions. We develop and deliver innovative, mission-critical products, services and technologies that save lives and protect our environment.
Our Foundation.   Over the course of 95 years, the Diversey brand has become synonymous with product quality, service and innovation. Our fully-integrated suite of solutions combines patented chemicals, dosing and dispensing equipment, cleaning machines, services and digital analysis and serves more than 85,000 customers in over 80 countries via our vast network of more than 1,400 technicians and approximately 8,500 employees globally. We are the leading global pure play provider to the approximately $32 billion cleaning and hygiene industry for the Institutional and Food & Beverage markets, where we hold the first or second position in the key markets in which we operate. We are also one of only two large, global players able to serve global strategic accounts (“GSAs”). We consider our scale to be a distinct competitive advantage given the fragmentation of our industry, and our customer relationships are deep and longstanding, resulting in highly recurring revenue streams.
Our Value Proposition.   We are a trusted partner to our customers in the delivery of hygiene, infection prevention, and cleaning solutions that provide peace of mind and help our customers maintain their brand integrity and grow their businesses. Through our end-to-end, repeatable services, we focus on achieving the following outcomes for our customers:

Improved hygiene, infection prevention and cleaning results

Improved operational efficiency and environmental sustainability

Reduced costs

High consistency and high standards across customer locations and geographies
Our unique customer engagement model drives a virtuous circle of customer acquisition, service expansion, and long-term retention that enables our history of strong growth and resiliency. Through our customer engagement model we strive to:

Understand Customer Needs and Goals.   We partner with customers to determine what matters most to them, with a focus on outcomes rather than specific products.

Design Custom Solutions.   We then design custom solutions, leveraging our more than 1,400 patents and patent applications from our library of more than 2,000 unique chemical formulations as well as our extensive and differentiated suite of dosing and dispensing equipment and floor care machines.

Integrate Solutions with Customer Workflows.   We train our customers’ end users on how to operate the products and equipment that make up our customized solutions, with a specific focus on health and safety considerations, sustainability, and service requirements.

Optimize Performance.   After implementation, we remain engaged with our customers on a regular basis and leverage our digital monitoring capabilities to ensure their equipment is operating properly, the workforce is fully trained, and solutions are optimized.

Expand the Value Proposition.   As we continue to engage with our customers, we continually review our performance, compare ourself against benchmarks, and work to identify ways to expand or enhance our services through new products and innovation, creating ‘win-win’ solutions for us and our customers.
 
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Our Customer Engagement Model
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We are uniquely positioned to deliver our value proposition due to the following attributes of our business model:

We are one of only two large, global players that offer a full suite of hygiene, infection prevention and cleaning solutions. Our full suite of products and services provide end-to-end solutions across the entire spectrum of our customers’ facilities to meet all hygiene, infection prevention and cleaning needs.

We utilize a flexible go-to-market strategy to meet the needs of our diverse customer base. We utilize our direct-selling capabilities and high-touch service offerings to meet the unique needs of GSAs and other large customers that require complex end-to-end solutions. For smaller, regional customers that require less customized solutions, we leverage a multi-channel distribution network that efficiently serves this customer segment.

Our robust R&D and engineering capabilities drive continuous innovation, ensuring that our product, service, and technology portfolio remains cutting edge for our customers.
The strength of our value proposition is evidenced by our deep customer relationships with a total revenue retention rate of over 98% (excluding growth with new and existing customers), and 99% retention rate for our top 100 customers, in 2020.
The graphic on the next page provides an example of how our comprehensive suite of cleaning, hygiene, and infection prevention solutions serve all facets of our customers’ infrastructure and operations.
 
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Customer Value Proposition Case Study:
Comprehensive Suite of Innovative Solutions Throughout the Hospital
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Our Resilient Business Model.    Due to the non-discretionary nature of our solutions, our business has a proven ability to withstand, and thrive in, challenging market conditions. Our top-line performance was strong during both the 2008 – 2010 Global Financial Crisis and the 2020 COVID-19 pandemic. Our revenues declined only 0.3% from 2008 to 2010, while revenues for the S&P 500 were down 3.8% over the same period. During the ongoing COVID-19 pandemic, from 2019 to 2020, we experienced a year-over-year constant currency organic revenue gain of 1.8% as compared with the S&P 500, which declined 3.2% over the same period. We believe the stability of our revenue is a result of several key aspects of our business model:

Essential and Mission-Critical Solutions.   Our products and services are essential to our customers’ abilities to meet health and safety regulations across their operative locations, regardless of end consumer demand for our customers’ products and services.

Small Customer Spend Relative to Total Cost of System.   While critical to our customers’ abilities to maintain hygienic standards and cleanliness, our products represent only a small portion of their total spend on cleaning costs.

Highly-Consumable Product and Service Offerings.   Our products are consumable and require ongoing replenishment, service and monitoring, which drives highly recurring revenue streams.

Customer, Product, and Geographic Diversification.   We serve our customers across approximately 300,000 global sites, as of the year ended December 31, 2020, with no individual product or service representing more than 2.5% of net sales for the year. We are further diversified across stable end-markets, including, among others, healthcare, food service, retail and grocery, processed food, dairy, brewing and beverages, with no individual end-market accounting for more than 14% of net sales for the year ended December 31, 2020.
Our Transformation.   Since becoming an independent company after the 2017 Sealed Air Corp. carve-out transaction, we have undergone a significant transformation. We have made numerous strategic investments that we believe position us well to achieve sustainable long-term growth and profitability:

New Talent & Organizational Structure.   Strengthened our organization with new senior leadership including a new Chief Executive Officer, Chief Financial Officer, Chief Strategy Officer, Chief Information Officer, Chief Revenue Officer, Chief Human Resources Officer, Head of Europe, and Head of North Asia, among others, to lead our company with operational expertise and to instill a competitive and winning culture.

Strategic and Commercial Focus.   Established strategic focus and a results-driven execution ethos aimed at achieving our core growth initiatives and driving innovation across the organization.

Operational Excellence, Systems, and Technology.   Instilled culture of continuous improvement and efficiency gains, invested approximately $50 million in corporate systems and technology to provide
 
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better visibility, control, and technology across all facets of our business, and increased sophistication of procurement and supply chain capabilities.

M&A.   Executed six strategic acquisitions since 2017 to help us strengthen our position in key markets, including enhancements to our Infection Prevention business.
This transformation has resulted in a significant change in our growth profile and profitability. On a constant dollar organic basis, our revenues increased at an average growth rate of 2.9% in the years 2018 through 2020, and at an average growth rate of 3.4% in the years 2018 and 2019. For the year ended December 31, 2018, we generated a net loss of $239 million and Adjusted EBITDA of $322 million at a 12.0% margin, compared to a net loss of $39 million and Adjusted EBITDA of $401 million at a 15.3% margin for the year ended December 31, 2020, which implies an 11.7% EBITDA compound annual growth rate. For a definition of Adjusted EBITDA and a reconciliation of net income (loss) to Adjusted EBITDA, see “Prospectus Summary — Summary Condensed Consolidated and Combined Financial Data.”
Our Growth.   Our business transformation has resulted in rapid and multifaceted EBITDA growth. Key components of our historical growth include:

End Market Growth.   Our Institutional and Food & Beverage markets have historically grown at an approximately 3% compound annual growth rate.

Increased Focus on Hygiene and Infection Prevention.   The COVID-19 pandemic has accelerated already-increasing cleaning and hygiene standards for our customers.

Increased Market Penetration.   Given our industry-leading portfolio and supply chain, we have experienced significant gains in the infection prevention market, and we are well-positioned to continue capitalizing on the increased demand for hygiene and infection prevention solutions.

Efficiency Improvements.   Efficiency gains, cash discipline, supply chain and procurement have driven continued margin improvements.

M&A.   Enhanced sourcing and integration capabilities have enabled us to complete 6 strategic acquisitions since 2017.
Our Financial Attributes.    We believe that our business model results in an attractive financial profile highlighted by our history of stable and growing revenues, high gross profit margin, expanding Adjusted EBITDA margins and strong unlevered cash flow generation. In the year ended December 31, 2020, we generated a gross profit margin of approximately 40%, which together with our ongoing margin improvement initiatives resulted in our Adjusted EBITDA margin expanding from 12.0% in the year ended December 31, 2018 to 15.3% in the year ended December 31, 2020. Our total indebtedness was $2,700.3 million as of December 31, 2020. Our customer-centric, asset-light approach focuses on customer service and engagement, rather than on asset intensity. This supports our high unlevered cash flow generation, which allows us to both reinvest in the business and capitalize on opportunities for inorganic growth. For the year ended December 31, 2020, our Unlevered Cash Flow Conversion was approximately 73%. For a reconciliation of unlevered cash flow to its most directly comparable GAAP metric, see “Prospectus Summary — Summary Condensed Consolidated and Combined Financial Data”.
Our Business Segments
We report our results of operations in two segments: Institutional and Food & Beverage. The following charts show net sales by segment and geography for the year ended December 31, 2020.
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Institutional Segment
We hold leading market positions in our regional core markets and believe we held the number one or number two market position in North America, Europe, the Middle East and Africa, Latin America and Asia-Pacific based on net sales for 2020. Our Institutional segment generated $2.0 billion in Revenue and $341 million in Adjusted EBITDA, which implies 17.1% margins for the year ended December 31, 2020.
Our high performance Institutional solutions are designed to enhance cleanliness, safety, environmental sustainability, and efficiency for our customers. We offer a broad range of products, services, solutions, equipment and machines including infection prevention and personal care products, floor and building care chemicals, kitchen and mechanical warewash chemicals and machines, dosing and dispensing equipment, and floor care machines. We also offer a range of engineering, consulting and training services related to productivity management, water and energy management, and risk management, supported by data provided through our digital solutions. We deliver these solutions to customers in the Healthcare, Education, Food Service, Retail & Grocery, Hospitality, and Building Service Contractors industries.
Our Institutional segment’s revenue base is recurring and stable due to the ‘sticky’ nature of our business model. Not only are our cleaning products consumable in nature and require periodic replacement, generating highly recurring revenue, but the optimal application of our chemicals is also controlled by our proprietary dosing and dispensing equipment installed at customer sites, which increases customer switching costs and generates operating efficiencies for our customers.
The following charts set forth the percentage of net sales for our Institutional segment by region and end market for the year ended December 31, 2020.
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Food & Beverage (F&B) Segment
We believe we held the number one or number two market position in Europe, the Middle East and Africa, Latin America and Asia-Pacific based on net sales for 2020. Our Food & Beverage segment generated $634 million in Net Sales and $114 million in Adjusted EBITDA, which implies 18.1% Adjusted EBITDA margins for the year ended December 31, 2020.
Our Food & Beverage products are designed to maximize the hygiene, safety, and efficiency of our customers’ production and cleaning processes while minimizing their impact on the natural resources they consume. We offer a broad range of products, solutions, equipment and machines including chemical products, engineering and equipment solutions, knowledge-based services, training through our Diversey Hygiene Academy, and water treatment. We deliver these solutions to enhance food safety, operational excellence, and sustainability for customers in the Brewing, Beverage, Dairy, Processed Foods, Pharma, and Agriculture industries.
Our Food & Beverage segment's revenue base is also recurring and stable. Our Cleaning-In-Place (“CIP”) and Open Plant Systems integrate our chemicals, lubricants, floor care equipment, and cleaning and dispensing tools, while our highly skilled technical application experts help customers achieve production efficiencies through customized solutions that utilize our products. The highly integrated and customized nature of the resulting solutions drive operational efficiencies as well as high switching costs for our customers, leading to very high customer retention. The recent addition of water treatment solutions to our Food & Beverage segment also fulfills a longstanding customer need for a bundled solution and offers future opportunities for cross-selling.
The following charts set forth the percentage of net sales for our Food & Beverage segment by region and end market for the year ended December 31, 2020.
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Our Sustainability Strategy
Since our founding, sustainability has been core to everything we do. Our “Facilitators for Life” strategy is inherent to our business model and aims to innovate sustainable solutions for customers, protect and care for people, and improve the environment, resulting in a virtuous cycle of benefits for Diversey and all our stakeholders. By creating innovative, “win-win-win” solutions that benefit our customers, our employees, and the environment, we deliver more value to customers and are better positioned to grow. In recognition of our longstanding commitment to sustainability excellence, we received a Silver Sustainability Rating from Ecovadis in 2020, given to companies in the top 20% of Ecovadis’ rankings.
Sustainability is core to the value proposition we provide our customers. We partner with our customers to design solutions that enable them to meet their effectiveness, efficiency, and sustainability goals. Given how engrained our products and services are in our customers’ operations, we are in a position to help them improve their performance in almost all key environmental areas, including reducing water, transportation, energy, greenhouse gas, packaging, waste, and chemical usage, as well as helping them extend equipment and product life and improve chemical and employee safety.
An example of how we accomplish this is when we work with customers to optimize and standardize the amount of chemicals they use in their cleaning operations. Customers often struggle with optimal chemical-to-water ratios, or they lack the means to ensure dosing standards are precisely followed across their facilities. At the user level, this often leads to “over” or “under-dosing” and ultimately an inability to optimally clean, disinfect, or sanitize. Our innovative, end-to-end solutions ensure that the proper chemicals are used, the proper amount of water is used, and that the optimal dosing equipment and training are in place to suit our customers’ needs. This reduces resource usage, saves money, and helps us strengthen the value we can provide.
Select examples of our customer impact include:

We contractually committed to 20% savings on cleaning chemicals for a large contract caterer after evaluating the inefficiencies of their legacy program.

We helped a large multinational retailer introduce concentrated cleaning products and increased logistics efficiency and labor savings that resulted in packaging and product waste reduction of 850 tons, reduced greenhouse gas emissions by 3 million kg CO2eq, and generated $20+ million of annual savings.

We helped a leading facilities management customer reduce its water footprint across all countries and client sites through designing and implementing customized solutions that have resulted in a reduction in water footprint of 68.5 million liters, reduced electricity usage by 3.6 million kWh, and reduced greenhouse gas emissions by 2.7 million kg CO2eq.
Our comprehensive approach to sustainability is also reflected in our commitment to our own employees. We have set internal goals to eliminate recordable workplace injuries, train 100% of our employees on our Code of Conduct, and strengthen our community relations in the locations in which we operate. Protecting and caring for our people also means investing in their future. We believe in providing our employees with resources to help them develop leadership capabilities and advance their careers. We seek to maintain a company culture that fosters a true sense of purpose among our people that we believe will drive long-term success.
Finally, we lead by example by improving the environmental impact of our own operations. We have identified ambitious operational goals to continue to reduce and improve the impact we have on our planet by 2025. Key goals include, but are not limited to, a 10% reduction in energy intensity, greenhouse gas emission intensity, and waste to landfill, a 5% reduction in water use intensity, reducing our packaging footprint, and achieving 100% compliance with our Responsible Chemistry Policy.
As we look to the future, we believe sustainability will continue to grow in importance for our customers. We are investing heavily and are well positioned to support our customers’ growing needs in this area, and as we do so, we will have the opportunity to further embed ourselves in their operations and grow with them.
 
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Our Market Opportunity
We believe that our customers, irrespective of their geography, size, or end market, understand the health, financial, and reputational risks associated with inadequate cleanliness and hygiene and, therefore, place significant value on our solutions. As such, we believe the large, global and diverse nature of the markets we serve provide attractive opportunities for profitable growth. We view our opportunity in terms of a Serviceable Addressable Market (“SAM”), which we believe we address today, and a Total Addressable Market (“TAM”), consisting of attractive adjacent market opportunities we are continuing to pursue that are in excess of our SAM.
Based on market research data, as well as our own analysis, we estimate our SAM, consisting of the global cleaning and hygiene products and services economy, to be approximately $32 billion as of 2019, inclusive of $26 billion for our Institutional market and $6 billion for our Food & Beverage market. Our TAM consists of adjacent cleaning and hygiene market opportunities that we are either in the early innings of penetrating or where we have developed products and services to begin penetrating. We estimate our TAM to be approximately $46 billion, including, but not limited to, adjacent market opportunities such as water treatment, consumer and residential wipes, UV disinfection, and food safety consulting representing an additional $14 billion in excess of our SAM.
We believe that the recurring demand for consumable products and services, as well as broader secular demand tailwinds, have driven stable historical demand growth of approximately 3% per year across our SAM. We also believe that the COVID-19 pandemic has further increased standards for hygiene, infection prevention and cleaning, solidifying these trends. We have analyzed and estimated the key components of our SAM and believe our market opportunity will continue to grow over the long-term at a rate of approximately 3% per year.
Additionally we believe we are well-positioned across a number of specific market segments within our SAM that are growing faster than the market overall:

Emerging Geographies.   We expect emerging economies, including the Asia Pacific and Latin America regions, to not only grow at a higher rate than the overall market, but also to experience even higher growth within their hygiene and cleaning markets as they modernize to western standards, a trend that has been further accelerated by COVID-19.

Infection Prevention.    We believe the market for infection prevention products, across both commercial and personal use cases, will continue to experience growth in excess of our SAM overall. While COVID-19 has elevated global hygiene and cleaning standards, driving increased demand for infection prevention products, the global market for disinfectant sprays and wipes is expected to grow at approximately an 8% CAGR from 2019 through 2023, according to Arizton. We believe that given our offerings across these product groups, we are well-positioned to capitalize on this significant, growing market opportunity.

Healthcare Sector.   We expect the overall healthcare sector to grow at approximately 5% within our SAM, driven by aging populations, increasing demand for healthcare services, and continued focus on cleaning and hygiene resulting from heightened quality standards intended to reduce incidences of healthcare acquired infections. We expect the shift to consumer-oriented, better quality care, and the impact of stricter regulatory compliance standards, will support above market growth within the sector.
While our SAM provides ample opportunity for sustained growth and market share gains across our core markets today, our TAM consists of additional adjacent market opportunities, which we are well-positioned to further penetrate. We categorize these adjacent market opportunities as those in which we already have products, services, and technology solutions deployed.
Key trends driving demand and increasing our TAM include:

Heightened Focus across Infection Prevention and Hygiene.   We expect the COVID-19 pandemic to drive a permanent increase in hygiene intensity across all markets. Additionally, the high incidences of healthcare acquired infections continue to increase standards for infection prevention in the fast-growing healthcare sector.
 
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Continued Food Safety Measures.   Restaurants, food producers, and distributors are focused on combatting the rise and frequency of foodborne illnesses, particularly as the trend towards fast casual dining continues to grow.

Increased Regulation.   Government regulations for food safety as well as changes in the regulatory environment continue to impact labeling and classification of chemicals.

Global Sustainability.   Eco resource scarcity is a particular focus across nearly all business end-markets, where regulatory, corporate and governance initiatives increasingly drive the continued adoption of sustainable solutions. As such, organizations are becoming increasingly aware of “green cleaning”, which uses cleaning methods and products with environmentally friendly ingredients and procedures designed to preserve human health, minimize waste and improve environmental quality. We believe that customers will continue to seek our products and services to help them identify cost-saving inefficiencies and reduce the environmental impacts of their operations.

Digital Innovation.   The shift toward the use of network-connected, physical devices embedded with electronics, software, sensors and actuators that collect and exchange data represents a growth opportunity across cleaning and hygiene categories as end markets are highly motivated to leverage technologies to reduce costs and increase efficiency.

Population Growth.   Increasing global population will drive growth in the need for food, beverage, agriculture, and healthcare over time, leading to positive secular dynamics for the food & beverage, grocery, and healthcare markets.
Our Competitive Strengths
We have numerous core strengths that we believe provide us with a competitive advantage:

Leading Market Position in Large and Growing Markets.    We are a recognized global brand and a leading provider of hygiene, infection prevention, and cleaning solutions with the number one or number two market position in the key markets in which we operate.

Rare Platform Offering Full Suite of Cleaning Chemicals, Services, and Machines.   Our comprehensive and differentiated solutions provide an end-to-end product portfolio that aligns with our customers’ mission critical priorities. As the only large-scale global provider of these solutions who also supplies cleaning machines, we are uniquely able to offer fully-integrated solutions to solve our customers’ specific challenges and become deeply embedded within our customers’ operations.

Diverse Revenue Streams across Products, Customers and Geographies.   Our global operations serve more than 85,000 customers across a broad range of industries, and we have a significant presence throughout North America, EMEA, and Emerging Markets.

Continuous Innovation to Meet Customers’ Evolving Needs.   Innovation is at the core of everything we do. Our focus on both digital and portfolio innovation has made us a leader in the development of cutting-edge solutions and a sought after partner for our customers.

Customized Solutions for the Most Sophisticated Customers, Resulting in High Retention and Resiliency.   We are a trusted advisor to those who require customizable solutions to provide their end consumers with total confidence and peace of mind, resulting in a 99% revenue retention rate for our top 100 customers in 2020 with ~84% of our customer relationships extending beyond ten years.

Asset-Light Business Model with High Cash Flow Conversion.   Our business model is customer-centric and requires minimal capital expenditures, driving high Unlevered Cash Flow conversion of approximately 73% and strong, stable returns.

Resilient Financial Model with Track Record of Consistent Performance.   Our diversified business model, broad exposure to a variety of attractive and stable end-markets, and flexible cost structure have enabled us to perform very well throughout varying economic cycles.
Our Growth Strategy
We believe that we have a clear and multifaceted growth strategy, the foundation of which has been set since our successful carve-out transaction from Sealed Air Corp. in 2017. We believe we are well positioned to accelerate and sustain growth and profitability over the long-term by executing on the following strategies:
 
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Capitalize on Institutional Market Recovery and Capture Above-Market Growth with New and Existing Customers.   Approximately 70% of our Institutional business has been negatively affected by COVID-19 and is predicted to recover to normalized levels. Despite the negative impact on many of the industries we serve, we saw growth across several end markets, including healthcare, due to the mission-critical nature of the solutions that we deliver. While we believe market recovery represents a tailwind for growth, we believe we have significant opportunities to further enhance growth by executing on the following strategies:
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Continue to Gain Share in Infection Prevention.   We estimate the market for infection prevention will grow at an approximately 8% compound annual growth rate from 2019 to 2023. Our hard surface disinfectants business has a proven history of market share gains in the healthcare sector and has grown significantly over the last six years. Following our recent acquisition of the intellectual property rights to the accelerated hydrogen peroxide technology of Virox (the “Virox IP Acquisition”) and acquisition of Wypetech, we expect further growth across our Infection Prevention business.
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Scale Food Service Market Offerings.   Following two large new customer wins in 2018, we made significant investments to build a sales and service infrastructure in the North America Food Service market. Since 2018, we have onboarded over 15,000 new sites. The infrastructure we have already built allows us to further penetrate segments of the market with much greater levels of efficiency and profitability.
-
Drive Commercial Excellence.   We have strengthened our commercial strategic capabilities significantly since 2017, and expect the recent reorganization of our sales and service functions and our increased use of customer analytics, sales training, and performance incentives to further bolster our leading market positions.
-
Expand in Emerging Markets.   We have leading positions in key emerging markets that are growing in excess of the market in total. We see tangible opportunities in these markets to not only support the operations of our existing multi-national customers, but to also support the growing demand for infection prevention as sanitation requirements increase to developed-country standards.
-
Focus on Global Strategic Accounts.   We are focused on expanding our share of wallet with GSAs. GSAs are growing faster than other players in their respective markets and require innovative, custom solutions to meet their sophisticated global standards. As one of only two players capable of serving GSAs, we believe we are well-positioned to capture this opportunity.
-
Continuously Innovate Across Products and Services.   Our innovation across chemicals, dosing and dispensing technology, and digital capabilities helps us continuously enhance our value proposition with new and existing customers.

Leverage Existing Sector Leadership to Grow Share in the Food & Beverage Market.   We plan to target local and regional customers where we are well-positioned to win. Our focus is on geographies and end markets where we can leverage our exceptional talent, strong local supply, and robust service infrastructure to further increase our high relative market share.
-
Cross-Sell Water Treatment Products and Services.   Water treatment is increasingly becoming a bundled solution with our core Food & Beverage product offerings. This represents a significant and identifiable opportunity within our existing customer base. Our new strategic partnership with a leading global water treatment company provides us with access to products and technology to cross-sell water and wastewater treatment solutions to our existing customers.
-
Accelerate Digital Innovation.   We are focused on expanding our presence by leveraging our innovative and industry-leading digital capabilities. Providing digital tools and robotics to create differentiated value and meet the complex needs of our customers is core to our growth.

Develop Sustainable Solutions.   We aim to leverage our history of innovation to stay at the forefront of the development of sustainable cleaning and hygiene solutions. Our sustainability-focused
 
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innovation platform allows us to provide our customers with cutting-edge solutions that help them to reduce water and energy use, as well as limit greenhouse gas emissions. We believe that our customers see the value in these innovations and that our focus on sustainability will continue to drive future growth.

Achieve Full Margin Potential.   Our margins have improved approximately 330 basis points since 2018 and we see significant opportunity for additional margin expansion. In 2019, we instituted our Earnings Improvement Program which is an ongoing, regularly updated, continuous improvement process to engage the entire organization in identifying and implementing cost savings initiatives. We have also instituted enhanced pricing processes and implemented cost-savings initiatives to optimize our sourcing and supply chain capabilities.

Execute on Accretive M&A.   We are a scale company operating in markets where the majority of our competitors are small, local or regional providers. Our ability to acquire and integrate other providers creates significant value for our company and our customers. We have executed six strategic acquisitions since 2017 and have identified a robust current pipeline to continue to drive accretive growth.
Impact of COVID-19
The COVID-19 pandemic has had a meaningful impact on our business segments. In the second quarter of 2020, our Institutional segment saw a 42% decline in year over year core institutional sales due to the marked volume decline at restaurants, hotels, and entertainment facilities driven by COVID-related shutdowns. The negative impact on core Institutional demand was offset by substantial growth in our Infection Prevention products and services, fueled by increased demand for disinfecting and cleaning products across our Hard Surface and Personal Care portfolios. Despite significant disruption to many of our end markets, our business continued to perform well. While overall year-over-year revenues declined approximately 4% in the second quarter of 2020, revenues in the third quarter of 2020 rebounded and grew 2% compared to the year prior, reflecting the essential nature of our solutions and the resilience of our diversified business model.
In the long-term, we expect that our recent product enhancements, digital investments, and cost efficiencies will result in accelerated growth as the end markets most negatively impacted by the pandemic continue to normalize and return to pre-COVID levels. Moreover, we expect increased demand for our infection prevention products and services to endure. According to the Disinfectant Sprays & Wipes Market report by Arizton market research, our markets for infection prevention products and services represented a $2 billion global market in 2019 and is expected to grow at a compound annual growth rate of approximately 8% from 2019 through 2023. We believe the pandemic has resulted in higher disinfection standards and a fundamental shift in demand for our products, thereby permanently altering the landscape for health and hygiene solutions.
Risks Associated with Our Business
There are a number of risks related to our business, this offering and our ordinary shares that you should consider before you decide to participate in this offering. You should carefully consider all the information presented in the section entitled “Risk Factors” in this prospectus. Some of the principal risks related to our business include the following:

the continuation of the COVID-19 pandemic may cause disruptions to our operations, customer demand, and our suppliers’ ability to support us;

uncertain global economic conditions which have had and could continue to have an adverse effect on our consolidated financial condition and results of operations;

the global nature of our operations exposes us to numerous risks that could materially adversely affect our consolidated financial condition and results of operations;

our substantial indebtedness, which requires a significant amount of cash to service our debt payment obligations, may limit our ability to plan for or respond to significant changes in our business;

an active trading market for our ordinary shares may not develop;

the trading price of our ordinary shares may be volatile; and
 
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the other factors set forth under “Risk Factors.”
These and other risks are more fully described in the section entitled “Risk Factors” in this prospectus. If any of these risks actually occurs, our business, financial condition, results of operations, cash flows and prospects could be materially and adversely affected. As a result, you could lose all or part of your investment in our ordinary shares.
Bain Capital
Bain Capital L.P. is one of the world’s leading private, multi-asset alternative investment firms with approximately $120 billion of assets under management. Bain Capital invests across asset classes including private equity, credit, public equity, venture capital and real estate, and leverages its shared platform to capture cross-asset opportunities in its strategic areas of focus. Currently, Bain Capital, L.P. has a team of over 500 investment professionals supporting its various asset classes. Headquartered in Boston, Bain Capital, L.P. has offices in Chicago, Dublin, Guangzhou, Hong Kong, London, Luxembourg, Madrid, Melbourne, Mumbai, Munich, New York, Palo Alto, San Francisco, Seoul, Shanghai, Singapore, Sydney and Tokyo.
Since 1984, Bain Capital Private Equity has made nearly 350 investments in a variety of industries around the world. The firm has a long and successful history of investing in industrial businesses and has a dedicated group of investment professionals focused on the sector. Bain Capital Private Equity has helped to build and scale many leading companies, including American Trailer Works, APEX Tool Group, Autodistribution, Dealer Tire, Fedrigoni, Imperial Dade, Innocor, Italmatch Chemicals, MKM Building Supplies, MSX International, Nova Austral, Sensata, TI Fluid Systems, Trinseo, Veritiv, and Wittur in the U.S. and Europe.
Certain investment funds controlled by Bain Capital Private Equity made an indirect equity contribution of $850.0 million into Diamond in connection with the 2017 Acquisition. See “Basis of Presentation.”
General Corporate Information
Our formation as a stand-alone business dates back to September 6, 2017, when Diamond consummated the 2017 Acquisition. Diversey Holdings, Ltd. was formed on November 3, 2020 for the purpose of completing the offering contemplated by this prospectus and related transactions.
The Company does not conduct any operations other than with respect to its direct and indirect ownership of its subsidiaries, and the business operations of Diversey are conducted primarily out of its indirect operating subsidiaries. The principal executive offices of the Diversey business are located at 1300 Altura Road, Suite 125, Fort Mill, South Carolina, 29708, and our telephone number at that address is (803)746-2200. Our corporate website is diversey.com. Information contained on, or available through, our website does not constitute part of, and is not deemed incorporated by reference into, this prospectus.
 
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THE OFFERING
Ordinary shares offered
46,153,846 ordinary shares.
Option to purchase additional shares
6,923,076 shares.
Ordinary shares to be outstanding after this offering
304,008,357 shares (or 310,931,433 shares if the underwriters’ option to purchase additional shares is exercised in full).
Use of proceeds
We estimate that our net proceeds from this offering will be approximately $651.7 million, or approximately $750.7 million if the underwriters’ option to purchase additional shares is exercised in full, and after deducting the underwriting discount and estimated offering expenses payable by us.
The principal purposes of this offering are to repay outstanding indebtedness, create a public market for our ordinary shares and enable access to the public equity markets for us and our shareholders. We expect to use approximately $651.7 million of net proceeds of this offering (or $750.7 million of the net proceeds of this offering if the underwriters exercise their option to purchase additional shares in full) to repay outstanding borrowings, including fees and expenses, under our Senior Secured Credit Facilities. See “Use of Proceeds” for additional information.
Controlled company
After this offering, affiliates of Bain Capital will own approximately 77.7% of our ordinary shares (or approximately 76.0% of our ordinary shares if the underwriters’ option to purchase additional shares is exercised in full). As a result, we expect to be a controlled company within the meaning of the corporate governance standards of the NASDAQ Global Select Market, or NASDAQ. See “Management — Corporate Governance — Controlled Company Status.”
Risk factors
Investing in our ordinary shares involves a high degree of risk. See “Risk Factors” elsewhere in this prospectus for a discussion of factors you should carefully consider before deciding to invest in our ordinary shares.
Proposed trading symbol
“DSEY.”
Conflict of Interest
An affiliate of Guggenheim Securities, LLC is a lender under our Senior Secured Credit Facilities and is expected to receive at least 5% of the net proceeds of this offering in connection with the repayment certain outstanding indebtedness under our Senior Secured Credit Facilities following the completion of this offering. See “Use of Proceeds.” As such, Guggenheim Securities, LLC is deemed to have a “conflict of interest” under Rule 5121 of the Financial Industry Regulatory Authority Inc., or Rule 5121. Accordingly, this offering will be made in compliance with the applicable provisions of Rule 5121. Pursuant to that rule, the appointment of a qualified independent underwriter is not necessary in connection with this offering. In accordance with FINRA Rule 5121(c), no sales of ordinary shares will be made to any discretionary account over which Guggenheim Securities, LLC exercises discretion without the prior specific written approval of the account holder.
 
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The number of ordinary shares to be outstanding following this offering is based on 257,854,511 ordinary shares outstanding as of March 1, 2021, on a pro forma basis after giving effect to the Reorganization Transactions, and excludes:

1,047,949 ordinary shares issuable upon vesting and settlement of restricted share units to be granted in connection with this offering; and

13,952,051 ordinary shares reserved for future issuance under our 2021 Omnibus Incentive Plan.
Unless otherwise indicated, all information in this prospectus assumes:

the consummation of the Reorganization Transactions;

the filing of our amended and restated articles of memorandum and association prior to the closing of this offering;

no issuance of shares underlying restricted share units granted in connection with this offering; and

no exercise by the underwriters of their option to purchase up to 6,923,076 additional ordinary shares.
 
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SUMMARY CONDENSED CONSOLIDATED AND COMBINED FINANCIAL DATA
The following tables present the summary condensed consolidated financial data of Diversey (the “Successor”) and the summary condensed combined financial data of the Predecessor Diversey Business. We have derived the summary historical condensed consolidated financial data of Diversey as of December 31, 2020 and 2019 and for the fiscal years ended December 31, 2020, 2019 and 2018 from our audited condensed consolidated financial statements for such years, which are included elsewhere in this prospectus. We have derived the summary historical condensed consolidated and combined financial data of Diversey as of December 31, 2018, the Successor period of March 15, 2017 through December 31, 2017 and the Predecessor period of January 1 through September 5, 2017 from our audited consolidated and combined financial statements and related notes thereto that do not appear in this prospectus. Our historical results are not necessarily indicative of our results in any future period. You should read the following summary condensed financial data together with our consolidated annual financial statements and the related notes included elsewhere in this prospectus and the “Capitalization” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” sections of this prospectus.
Diversey Holdings, Ltd. was formed on November 3, 2020 in anticipation of this offering and has not, to date, conducted any activities other than those incident to its formation and the preparation of the prospectus and the registration statement of which this prospectus forms a part.
 
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Successor (consolidated)
Predecessor (combined)
Years end December 31,
For the period
March 15 –
December 31
For the period
January 1 –
September 5
(in millions, except per share amounts)
2020
2019
2018
2017
2017
Statements of Operations Data:
Net sales
$ 2,629.2 $ 2,623.9 $ 2,688.1 $ 870.2 $ 1,681.3
Cost of sales
1,559.4 1,522.1 1,570.6 518.2 959.0
Gross profit
1,069.8 1,101.8 1,117.5 352.0 722.3
Selling, general and administrative expenses
768.2 855.6 883.8 284.3 641.9
Transition and transformation costs
42.5 52.8 120.6 53.7
Management fee
7.5 7.5 7.5 2.4
Share-based compensation
67.5 3.0
12.3
Amortization of intangible assets
98.2 93.7 91.2 19.4 40.6
Impairment of goodwill
68.5
Restructuring costs
25.6 19.8 24.9
0.1
Merger and acquisition-related costs
1.0 0.3 7.3 38.0
Operating income (loss)
59.3 69.1 (86.3) (45.8) 27.4
Interest expense
127.7 141.0 135.2 42.7 9.0
Gain on sale of business investment
(13.0)
Bridge commitment fees
7.5
Foreign currency loss related to Argentina subsidiaries
1.6 11.4 2.4
Loss on settlement of foreign currency
contract
121.3
Other (income) expense, net
(40.7) 6.0 0.8 (2.7) (0.9)
Income (loss) before income tax provision (benefit)
(29.3) (76.3) (224.7) (214.6) 19.3
Income tax provision (benefit)
9.2 32.7 14.4 (61.6) 23.8
Net loss
$ (38.5) $ (109.0) $ (239.1) $ (153.0) $ (4.5)
Basic and diluted loss per share(1)
$ (0.20) $ (1.15) $ (2.54) $ (1.63)
Basic and diluted weighted-average shares outstanding(1)
195.80 94.40 94.00 93.70
Basic and diluted pro forma loss per share(1)(2)
$ (0.43)
Basic and diluted pro forma weighted-
average shares outstanding(1)(2)
304.0
Balance Sheet Data (as of the end of period):
Working capital
$ (6.6) $ 29.7 $ 42.4
Cash and cash equivalents
192.9 128.3 73.4
Property and equipment, net
188.3 172.2 206.8
Total assets
4,286.1 4,213.5 4,190.0
Total liabilities
4,794.7 4,534.7 4,546.9
Total stockholder’s equity
(508.6) (321.2) (356.9)
Other Financial Data:
EBITDA(3) $ 288.1 $ 242.7 $ 76.9 $ (131.4) $ 116.9
Non-GAAP consolidated Adjusted EBITDA(3)
$ 401.2 $ 339.8 $ 321.6 $ 113.8 $ 196.0
Dosing and dispensing equipment expenditures
$ (45.6) $ (93.4) $ (83.2) $ (24.5) $ (38.5)
Capital expenditures
$ (41.4) $ (29.0) $ (44.2) $ (4.1) $ (12.3)
 
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Sales Growth Reconciliation:
Year Ended December 31,
(in millions, except percentages)
2020
2019
2018
Net Sales – Prior Year
$ 2,623.9 $ 2,688.1 $ 2,551.5
Organic change (non-U.S. GAAP)
48.1 1.8% 52.2 1.9% 125.0 4.9%
SCJ(4) (22.6) (0.9)%
Unilever(5) (6.8) (0.3)% (16.3) (0.6)%
Acquisition
4.9 0.2% 25.5 0.9% 79.8 3.1%
Constant dollar change (non-U.S. GAAP)
53.0 2.0% 70.9 2.6% 165.9 6.5%
Foreign currency translation
(47.7) (1.8)% (135.1) (5.0)% (29.3) (1.1)%
Total change (U.S. GAAP)
5.3 0.2% (64.2) (2.4)% 136.6 5.4%
Net Sales – Current Year
$ 2,629.2 $ 2,623.9 $ 2,688.1
(1)
See Note 23  — Earnings Per Share in the notes to our consolidated financial statements included elsewhere in this prospectus for additional information with respect to our calculations of our actual basic and diluted loss per share.
(2)
Reflects the ordinary shares issued in this offering and the Reorganization Transactions.
(3)
We have presented EBITDA, which is defined as income (loss) before income tax provisions (benefit), interest expense, and depreciation and amortization, and Adjusted EBITDA, which is defined as EBITDA adjusted for the other items described below, each of which is considered a Non-GAAP financial measure. Our EBITDA and Adjusted EBITDA measures are included in this prospectus as supplemental measures of our liquidity and performance and because we believe such measures are frequently used by securities analysts, investors and other interested parties in the evaluation of companies in our industry.
Our EBITDA and Adjusted EBITDA measures are not measures of our liquidity or financial performance under GAAP and should not be considered as alternatives to net income (loss), income (loss) before income taxes provision (benefit) or any other performance measures derived in accordance with GAAP, or as an alternative to cash flow from operating activities as a measure of our liquidity. The use of our EBITDA and Adjusted EBITDA measures instead of net income (loss) has limitations as an analytical tool, including the failure to reflect changes in cash requirements, including cash requirements necessary to service principal or interest payments on our debt, pay our income taxes, invest in our maintenance and growth capital expenditures or in our working capital needs. Management compensates for these limitations by relying primarily on our GAAP results and by using our EBITDA and Adjusted EBITDA measures only supplementally. Other companies in our industry may calculate these measures differently than we do, limiting their usefulness as a comparative measure.
(4)
The Company had a Brand Licensing Agreement (“BLA”) with SC Johnson (“SCJ”) that terminated in the second quarter of 2017. This adjustment represents the revenue recognized under the BLA that did not repeat in subsequent periods.
(5)
In 2018 the Company’s Master Licensing Agreement (“MLA”) with Unilever (under which the Company sold and recorded revenue for Unilever products) expired and was replaced with a Master Sales Agency (“MSA”) agreement whereby the Company effectively receives a commission on the sale of Unilever products. This adjustment represents the revenue recorded under the MLA offset by the commission received under the MSA agreement.
 
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The following table shows a reconciliation of U.S. GAAP (as defined herein) income (loss) before income tax provisions (benefit) to EBITDA, Adjusted EBITDA, Unlevered Cash Flow and Unlevered Cash Flow Conversion:
Successor (consolidated)
Predecessor (combined)
Years Ended December 31,
For the period
March 15 –
December 31,
For the period
January 1 –
September 5
(in millions, except percentages)
2020
2019
2018
2017
2017
Income (loss) before income tax provisions (benefit)
$ (29.3) $ (76.3) $ (224.7) $ (214.6) $ 19.3
Interest expense
127.7 141.0 135.2 42.7 9.0
Interest income
(5.9) (7.5) (5.8) (1.4) (3.3)
Amortization expense of intangible assets
acquired
98.2 93.7 91.2 19.4 40.6
Depreciation expense included in cost of sales
89.5 84.4 73.4 21.5 41.1
Depreciation expense included in selling, general and administrative expenses
7.9 7.4 7.6 1.0 10.2
EBITDA
$ 288.1 $ 242.7 $ 76.9 $ (131.4) $ 116.9
Impairment of goodwill(1)
68.5
Transition and transformation costs and non-recurring costs(2)
42.5 52.8 120.6 63.3
Restructuring costs(3)
25.6 19.8 24.9 0.1
Foreign currency loss related to Argentina subsidiaries(4)
1.6 11.4 3.4
Loss on foreign currency forward contract(5)
121.3
Adjustment of tax indemnification asset(6)
2.8 7.1 31.0 (3.9)
Merger and acquisition-related cost(7)
1.0 0.3 7.3 38.0
Acquisition accounting adjustments(8)
1.9 5.3 16.0
Bain Capital management fee(9)
7.5 7.5 7.5 2.4
Non-cash pension and other post-employment benefit plan(10)
(12.9) (8.8) (10.5) (2.9) (5.9)
Foreign currency loss (gain)(11)
(25.1) 10.8 (16.3) 0.8 0.1
Factoring fees(12)
4.3 3.4 0.6
Share-based incentive compensation(13)
67.5 3.0 12.3
Charges related to sale of Diversey(14)
23.1
Bridge commitment fees(15)
7.5
Stand-alone adjustment(16)
40.3
Gain on sale of business and investments(17)
(13.0)
Non-cash items
1.8 4.2
Other items
(1.7) 0.9 2.4 0.9 4.9
Non-GAAP consolidated Adjusted EBITDA
$ 401.2 $ 339.8 $ 321.6 $ 113.8 $ 196.0
Changes in net working capital(18)
(86.9) (70.3) 9.6
Collection of deferred factored receivables
66.9 80.8 12.5
Dosing and dispensing equipment, net
(45.6) (93.4) (83.2)
Capital expenditures
(41.4) (29.0) (44.2)
Unlevered Cash Flow(19)
$ 294.2 $ 227.9 $ 216.3
Unlevered Cash Flow Conversion(20)
73% 67% 67%
(1)
Represents impairment of goodwill primarily due to significant currency devaluation and volatility, as well as deterioration in economic conditions in Latin America and the Middle East and currency devaluation and lower than expected performance in Europe and North America.
 
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(2)
In the period following the 2017 Acquisition, we incurred costs primarily consisting of professional and consulting services in such areas as information technology, controllership, tax, treasury, transformation services, human resources, procurement and supply chain in establishing ourselves as a standalone company and to position ourselves for future growth. Costs incurred in 2020 include those necessary to become a publicly traded Company.
(3)
Includes costs related to restructuring programs including expenses mainly related to reduction in headcount.
(4)
Effective July 1, 2018, Argentina was deemed to have a highly inflationary economy and the functional currency for our Argentina operations was changed from the Argentinian Peso to the United States dollar and remeasurement charges/credits are recorded in our Consolidated Statements of Operations rather than as a component of Cumulative Translation Adjustment on our Consolidated Balance Sheets.
(5)
Represents a one-time loss of $121.3 million on the settlement of a foreign currency contract to hedge the variability of the U.S. dollar equivalent of the original borrowings under the Euro tranche of our Term Loan Facility and the Senior Notes.
(6)
In connection with the 2017 Acquisition, the purchase agreement governing the transaction includes indemnification provisions with respect to tax liabilities. The offset to this adjustment is included in income tax provision. Refer to Note 16 — Income Taxes in the notes to our consolidated financial statements included elsewhere in this prospectus for additional information.
(7)
In connection with the 2017 Acquisition, the acquisition of Twister Holding AB (“Twister” or “Twister Acquisition”) in 2017, and the acquisition of Zenith Hygiene Group PLC (“Zenith” or “Zenith Acquisition”) in 2018, we incurred acquisition-related costs during the years ended December 31, 2019 and December 31, 2018. These costs consisted primarily of investment banking, legal and other professional advisory services costs.
(8)
In connection with the 2017 Acquisition, Twister Acquisition and Zenith Acquisition, we recorded fair value increases to our inventory. These amounts represent the amortization of this increase.
(9)
Represents the fees paid to Bain Capital pursuant to a management agreement whereby we have received general business consulting services; financial, managerial and operational advice; advisory and consulting services with respect to selection of advisors; advice in different fields; and financial and strategic planning and analysis. The management agreement will terminate pursuant to its terms upon the consummation of this offering, at which time we will pay to Bain Capital a lump sum amount of $17.5 million. See “Certain Relationships and Related Party Transactions — Management Agreement.”
(10)
Represents, the net impact of the expected return on plan assets, interest cost, and settlement cost components of net periodic defined benefit income related to our defined benefit pension plans. Refer to Note 14 — Defined Benefit Pension Plans and Note 15 — Other Post-employment Benefits and Other Employee Benefits Plans in the notes to our consolidated financial statements included elsewhere in this prospectus for additional information.
(11)
Represents the unrealized foreign exchange impact on our operations. The loss recorded in the periods were primarily due to the impact of the strengthening of the U.S. dollar to the euro on our U.S. dollar-denominated debt. For the year ended December 31, 2018, this item also includes a restructuring of certain intercompany loans related to a legal reorganization in connection with our tax planning strategy.
(12)
On November 15, 2018, we entered into a Master Agreement with Factofrance, S.A. Additionally, on April 22, 2020, the Company entered into a securitization arrangement with PNC Bank (“PNC”) to sell certain North American customer receivables without recourse on a revolving basis. This amount represents the fees to sell certain trade receivables, without recourse. Refer to Note 6 — Financial Statement Details in the notes to our consolidated financial statements included elsewhere in this prospectus for additional information.
(13)
Represents compensation expense associated with our Management Equity Incentive Plan (“MEIP”) awards. See Note 19 — Share-Based Compensation in the notes to our consolidated financial statements included elsewhere in this prospectus for additional information.
(14)
Represents costs incurred by Sealed Air related to the sale of the Predecessor Diversey Business in the 2017 Acquisition that were included in the operating results of the Predecessor Diversey Business.
(15)
Represents commitment fees that were expensed upon the termination of a commitment with respect to a bridge financing facility.
 
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(16)
Represents the removal of certain sales and marketing expenses and selling, general and administrative expenses to reflect the Diversey Business’ operation as a standalone entity separate and apart from Sealed Air. These amounts reflect the historical overhead expenses allocated by Sealed Air to the Diversey Business which were identified by management through its analysis of the Diversey Business’ personnel and functional areas as the expenses that would not have been incurred by the Diversey Business had it been operated as a standalone entity.
(17)
Represents the non-cash gain on sale of our shares in connection with the Virox IP Acquisition. See Note 5 — Acquisitions in the notes to our consolidated financial statements included elsewhere in this prospectus for more information.
(18)
Represents changes in trade receivables, net, inventories, net, and accounts payable.
(19)
We believe Unlevered Cash Flow is useful for monitoring the business because it provides a measure of the strength of our operations and ability to generate cash flow. Management calculates Unlevered Cash Flow as Adjusted EBITDA plus or minus changes in net working capital, plus collections of deferred factored receivables, less expenditures on dosing and dispensing equipment and capital expenditures.
(20)
Unlevered Cash Flow conversion is the ratio of Unlevered Cash Flow divided by Adjusted EBITDA for each period.
 
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RISK FACTORS
This offering and an investment in our ordinary shares involve a high degree of risk. You should carefully consider the risks described below, together with the financial and other information contained in this prospectus, before you decide to purchase our ordinary shares. If any of the following risks actually occurs, our business, financial condition, results of operations, cash flows and prospects could be materially and adversely affected. As a result, the trading price of our ordinary shares could decline and you could lose all or part of your investment in our ordinary shares.
Risks Related to Our Business
Our business may be adversely affected by the novel coronavirus (“COVID-19”) pandemic and we may face risks related to COVID-19 which could significantly disrupt our operations, customer demand, and our suppliers’ ability to support us, resulting in material adverse impacts to our business, financial condition, operating results, and cash flows.
We are closely monitoring the outbreak of respiratory illness caused by COVID-19. The virus has spread to many countries and has been declared by the World Health Organization to be a pandemic, resulting in action from governments that have significantly affected virtually all facets of global economies. Governments have implemented enhanced screenings, quarantine requirements, and travel restrictions in connection with the COVID-19 outbreak.
Shelter-in-place orders and other measures, including work-from-home and social distancing policies implemented to protect employees, may result in reduced workforce availability at product manufacturing sites, construction delays, and reduced capacity at some of our vendors and suppliers. Restrictions on our access to or operation of manufacturing facilities or on our support operations or workforce, or similar limitations for our vendors and suppliers, can impact our ability to meet customer demand and could have a material adverse effect on our financial condition and results of operations, particularly if prolonged. Similarly, current and future restrictions or disruptions of transportation, such as reduced availability of air transport, port closures, and increased border controls or closures, can also impact our ability to meet demand and could materially adversely affect us. Our customers have experienced, and may continue to experience, disruptions in their operations and supply chains, which can result in delayed, reduced, or canceled orders, or collection risks, and which may adversely affect our results of operations.
Our business may be more adversely impacted by the effects of COVID-19 in the future. We source materials from different parts of the world that have been affected by the virus which could have an adverse impact on our supply chain operations and ability to get materials needed to produce our products. Additionally, the disruption to global markets that has occurred due to the epidemic has adversely impacted the demand for our goods and services particularly in the hotel, restaurant and office cleaning sectors. It is possible that the current outbreak and continued spread of COVID-19 will cause an economic slowdown, and it is possible that it could cause a global recession. There is a significant degree of uncertainty and lack of visibility as to the extent and duration of any such slowdown or recession. Given the significant economic uncertainty and volatility created by the pandemic, it is difficult to predict the nature and extent of impacts on demand for our products. These expectations are subject to change without warning and investors are cautioned not to place undue reliance on them. The prolonged occurrence of COVID-19 could result in a significant downturn in the food service, hospitality, office cleaning and travel industries and a significant drop in demand for some of our products and services, which could materially adversely affect our business.
The spread of COVID-19 has caused us to modify our business practices (including employee travel, employee work locations, cancellation of physical participation in meetings, events and conferences, and social distancing measures), and we may take further actions as may be required by government authorities or that we determine are in the best interests of our employees, customers, partners, vendors, and suppliers. Work-from-home and other measures introduce additional operational risks, including cybersecurity risks, and have affected the way we conduct our product development, validation, and qualification, customer support, and other activities, which could have an adverse effect on our operations. There is no certainty that such measures will be sufficient to mitigate the risks posed by the virus, and illness and workforce disruptions could lead to unavailability of key personnel and harm our ability to perform critical functions.
 
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The extent of the impact of COVID-19 on our operational and financial performance will depend on future developments, including, but not limited to, the duration and spread of the outbreak, related travel advisories and restrictions and the timing and development of a vaccine, all of which are highly uncertain and cannot be predicted. Government shutdown orders may result in a closure of operations for an uncertain duration impacting our business results. Preventing the effects from and responding to any market disruptions from COVID-19, or any other public health threat related or otherwise, may further increase costs of our business and may have a material adverse effect on our business, financial condition, and results of operations.
While we have taken steps to minimize the potential for COVID-19 exposure in the workplace, the potential for a COVID-19 outbreak within our facilities occurring and significantly disrupting operations remains possible. Increased infection rates in geographic locations in which we operate have the potential to result in disruptions to our operations at an increased rate than we currently experience.
There are no comparable recent events that provide guidance as to the effect the spread of COVID-19 as a global pandemic may have, and, as a result, the ultimate impact of the pandemic is highly uncertain and subject to change. We do not yet know the full extent of the impacts on our business, our operations or the global economy as a whole. However, the effects could materially heighten many of our known risks described herein.
Uncertain global economic conditions have had and could continue to have an adverse effect on our consolidated financial condition and results of operations.
Uncertain global economic conditions have had and may continue to have an adverse impact on our business in the form of lower net sales due to weakened demand, unfavorable changes in product price/mix, or lower profit margins. For example, global economic downturns have adversely impacted some of our end-users and customers, such as food processors, distributors, supermarket retailers, hotels, restaurants, retail establishments, business service contractors, e-commerce fulfillment firms, and other end-users that are particularly sensitive to business and consumer spending.
During economic downturns or recessions, there can be a heightened competition for sales and increased pressure to reduce selling prices as our customers may reduce their volume of purchases from us. If we lose significant sales volume or reduce selling prices significantly, then there could be a negative impact on our consolidated financial condition or results of operations, profitability and cash flows.
Reduced availability of credit may also adversely affect the ability of some of our customers and suppliers to obtain funds for operations and capital expenditures. This could negatively impact our ability to obtain necessary supplies as well as our sales of materials and equipment to affected customers. This could additionally result in reduced or delayed collections of outstanding accounts receivable.
The global nature of our operations exposes us to numerous risks that could materially adversely affect our consolidated financial condition and results of operations.
We operate in approximately 54 countries, and our products are distributed in those countries as well as approximately 26 countries in other parts of the world. A large portion of our manufacturing operations are located outside of the U.S. and a majority of our net sales are generated outside of the U.S. These operations, particularly in developing regions, are subject to various risks that may not be present or as significant for our U.S. operations. Economic uncertainty in some of the geographic regions in which we operate, including developing regions, could result in the disruption of commerce and negatively impact cash flows from our operations in those areas.
Risks inherent in our international operations include:

non-U.S. currency exchange controls and tax rates;

non-U.S. currency exchange rate fluctuations, including devaluations;

the potential for changes in regional and local economic conditions, including local inflationary pressures;
 
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restrictive governmental actions such as those on transfer or repatriation of funds and trade protection matters, including anti-dumping duties, tariffs, embargoes, economic sanctions, and prohibitions or restrictions on acquisitions or joint ventures;

changes in laws and regulations, including the laws and policies of the U.S. affecting trade and foreign investment;

the difficulty of enforcing agreements and collecting receivables through certain non-U.S. legal systems;

variations in protection of intellectual property and other legal rights;

more expansive legal rights of workers outside the U.S., unions, collective bargaining agreements or works councils;

changes in labor conditions and difficulties in staffing and managing international operations;

import and export delays;

social plans and regulations that prohibit or increase the cost of certain restructuring actions;

the potential for nationalization of enterprises or facilities; and

unsettled political conditions and possible terrorist attacks against the countries in which we operate or other interests.
In addition, there are potential tax inefficiencies and tax costs in repatriating funds from the various jurisdictions in which we do business.
These and other factors may have a materially adverse effect on our international operations and consequently, on our consolidated financial condition or results of operations.
Fluctuations between non-U.S. currencies and the U.S. dollar could materially impact our consolidated financial condition or results of operations.
A significant portion of our net sales during the year ended December 31, 2020 were generated outside the United States. We translate sales and other results denominated in non-U.S. currency into U.S. dollars for our consolidated combined financial statements included elsewhere in this prospectus. As a result, we are exposed to currency fluctuations both in receiving cash from our international operations and in translating our financial results back to U.S. dollars. During periods of a strengthening U.S. dollar, our reported international sales and net income could be reduced because non-U.S. currencies may translate into fewer U.S. dollars. We cannot predict the effects of exchange rate fluctuations on our future operating results. As exchange rates vary, our results of operations and profitability may be harmed. While we may use financial instruments to hedge certain non-U.S. currency exposures, this does not insulate us completely from non-U.S. currency effects and exposes us to counterparty credit risk for non-performance. Such hedging activities may be ineffective or may not offset more than a portion of the adverse financial effect resulting from non-U.S. currency variations. The gains or losses associated with hedging activities may harm our results of operations.
In all jurisdictions in which we operate, we are also subject to laws and regulations that govern non-U.S. investment, non-U.S. trade and currency exchange transactions. These laws and regulations may limit our ability to repatriate cash as dividends or otherwise to the U.S. and may limit our ability to convert non-U.S. currency cash flows into U.S. dollars.
We have recognized foreign currency exchange gains and losses related to the currency devaluations in Argentina in 2020, 2019 and 2018 as a result of the country being designated as highly inflationary under U.S. GAAP.
Political and economic instability and risk of government actions affecting our business and our customers or suppliers may adversely impact our business, results of operations and cash flows.
We are exposed to risks inherent in doing business in each of the countries or regions in which we, our customers, or suppliers operate, including: civil unrest, acts of terrorism, sabotage, epidemics, force majeure,
 
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war or other armed conflict and related government actions, including sanctions/embargoes, the deprivation of contract rights, the inability to obtain or retain licenses required by us to operate our plants or import or export our goods or raw materials, the expropriation or nationalization of our assets, and restrictions on travel, payments or the movement of funds. As some of our customers operate in the hospitality industry that supports both domestic and international tourism, their business and indirectly ours, could be exposed to the negative consequences of travel pattern disruptions due to major terrorist threats. Also, if additional restrictions on trade with China and Russia were adopted by the U.S., the European Union or the United Nations, and were applicable to our products, we could lose sales and experience lower growth rates in the future.
Raw material pricing, availability and allocation by suppliers as well as energy-related costs may negatively impact our results of operations, including our profit margins and net sales.
We use petrochemical-based raw materials to manufacture many of our products and oil-based materials for our packaging. The prices for these raw materials are cyclical, and increases in market demand or fluctuations in the global trade for petrochemical-based raw materials and energy could increase our costs. In addition, the prices of many of the other key raw materials used in our businesses, such as caustic soda, solvents, waxes, phosphates, surfactants, polymers and resins, chelates and fragrances, are cyclical based on numerous supply and demand factors that are beyond our control. Furthermore, the usage of certain chemical components used in the manufacturing of our products, such as chemicals used in our surfactants, may be limited or restricted by government regulations, which could restrict our sourcing options. If we are unable to minimize the effects of increased raw material costs through sourcing, pricing or other actions, our business, consolidated financial condition or results of operations may be materially adversely affected. We also have some sole-source suppliers, and the lack of availability of supplies could have a materially adverse effect on our consolidated financial condition or results of operations.
Natural disasters such as hurricanes, as well as political instability and terrorist activities, may negatively impact the production or delivery capabilities of refineries and natural gas and petrochemical suppliers and suppliers of other raw materials in the future. These factors could lead to increased prices for our raw materials, curtailment of supplies and allocation of raw materials by our suppliers, which could reduce revenues and profit margins and harm relations with our customers, which could have a materially adverse effect on our consolidated financial condition or results of operations.
Unfavorable consumer responses to price increases could have a material adverse impact on our sales and earnings.
From time to time, and especially in periods of rising raw material costs, we increase the prices of our products. Significant price increases could impact our earnings depending on, among other factors, the pricing by competitors of similar products and the response by our customers to higher prices. Such price increases may result in lower volume of sales and a subsequent decrease in gross margin and adversely impact earnings.
If we do not develop new and innovative products or if such products are not accepted by customers in our markets or fail to meet sales or margin expectations, our results could be negatively affected.
Our products must be kept current to meet our customers’ needs, overcome competitive products and meet evolving regulatory requirements. To remain competitive, we therefore must develop new and innovative products on an ongoing basis, and we invest significantly in the research and development of new products. If we do not successfully develop innovative products, it may be difficult to differentiate our products from our competitors’ products and satisfy regulatory requirements, and our sales and results could suffer.
Our competitive advantage is due in part to our ability to develop and introduce new products in a timely manner at favorable margins. The development and introduction cycle of new products can be lengthy and involve high levels of investment. New products may not meet sales or margin expectations due to many factors, including our inability to (i) accurately predict demand, end-user preferences and evolving industry standards, (ii) resolve technical and technological challenges in a timely and cost-effective manner or (iii) achieve manufacturing efficiencies.
 
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Cyber risk and the failure to maintain the integrity of our operational or security systems or infrastructure, or those of third parties with which we do business, could have a materially adverse effect on our business, consolidated financial condition and results of operations.
We rely to a large extent upon automation, software and infrastructure, both internally and with third-parties, to operate our business. The size and complexity of our information technology systems make them increasingly vulnerable to breakdown, malicious intrusion and random attack, which may pose a risk to the security of our systems and networks and the confidentiality, availability and integrity of our data. Disruptions or failures in the physical infrastructure or operating systems that support our businesses and customers, or cyber-attacks or security breaches of our networks or systems, could result in the loss of customers and business opportunities, legal liability, regulatory fines, penalties or intervention, reputational damage, reimbursement or other compensatory costs, and additional compliance costs, any of which could materially adversely affect our business, consolidated financial condition and results of operations. While we take reasonable measures to mitigate these risks, due to continually evolving threats, our systems, networks, products, solutions and services remain potentially vulnerable to advanced and persistent threats.
We also maintain and have access to sensitive, confidential or personal data or information in some of our businesses that is subject to privacy and security laws, regulations and customer controls of the U.S., the European Union and other non-U.S. jurisdictions. Despite our efforts to protect such sensitive, confidential or personal data or information, our facilities and systems and those of our customers and third-party service providers may be vulnerable to security breaches, theft, misplaced or lost data, programming and/or human errors that could lead to the compromising of sensitive, confidential or personal data or information, improper use of our systems, software solutions or networks, unauthorized access, use disclosure, modification or destruction of information, defective products, production downtimes and operational disruptions, which in turn could result in liabilities and penalties and could damage our reputation, cause us to incur substantial costs and adversely affect our business and our results of operations. Additionally, we could be subject to litigation and government enforcement actions as a result of any such failure.
The development of internet of things (“IoT”) also presents security, privacy and execution risks. IoT solutions may collect large amounts of data, and our handling of IoT data may not satisfy customers or regulatory requirements. IoT scenarios may increasingly affect personal health and safety. If IoT solutions that include our technologies do not work as intended, violate the law or harm individuals or businesses, we may be subject to legal claims or enforcement actions. These risks, if realized, may increase our costs, damage our reputation or brands, or negatively impact our business and operating results.
Furthermore, data privacy is subject to frequently changing rules and regulations. Our failure to adhere to or successfully implement appropriate responses in this area could result in legal liability or impairment to our brands’ reputations.
The introduction of the Organization for Economic Co-operation and Development’s (“OECD”) Base Erosion and Profit Shifting (“BEPS”) may adversely affect our effective rate of tax in future periods.
Changes in tax laws, which have become more rapid in recent years, or tax rulings related thereto could affect our financial position and results of operations. For example, in light of continuing global fiscal challenges, various levels of government and international organizations such as the Organization for Economic Co-operation and Development (“OECD”) and the European Union are increasingly focused on tax reform and other legislative or regulatory action to increase tax revenue. These tax reform efforts, such as the OECD-led Base Erosion and Profit Shifting project (“BEPS”), are designed to ensure that corporate entities are taxed on a larger percentage of their earnings. Although some countries have passed tax laws based on findings from the BEPS project, the final nature, timing and extent of any such tax reforms or other legislative or regulatory actions is unpredictable, and it is difficult to assess their overall effect. These tax reforms, or any other changes in tax laws, could increase our effective tax rate and adversely impact our financial results.
The consolidation of customers may adversely affect our business, consolidated financial condition or results of operations.
Customers in the food service, food and beverage processing, building care, lodging, industrial distribution and healthcare sectors have been consolidating in recent years, and we believe this trend may
 
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continue. Such consolidation could have an adverse impact on the pricing of our products and services and our ability to retain customers, which could in turn adversely affect our business, consolidated financial condition or results of operations.
We experience competition in the markets for our products and services and in the geographic areas in which we operate.
Our products compete with similar products made by other manufacturers and with a number of other types of materials or products. We compete on the basis of performance characteristics of our products, service, price and innovations in technology. A number of competing U.S. and non-U.S. companies are well-established.
The market for our products is highly competitive. Our products face significant competition from global, national, regional and local companies within some or all of our product lines in each sector that we serve.
Our inability to maintain a competitive advantage could result in lower prices or lower sales volumes for our products. Additionally, we may not successfully implement our pricing actions. These factors may have an adverse impact on our consolidated financial condition or results of operations.
Instability and uncertainty in the credit and financial markets could adversely impact the availability of credit that we and our customers need to operate our or their businesses.
We depend upon the availability of credit to operate our business. Our customers and suppliers also require access to credit for their businesses. Instability and uncertainty in the credit and financial markets could adversely impact the availability of future financing and the terms on which it might be available to us, our customers and our suppliers. Inability to access credit markets, or a deterioration in the terms on which financing might be available to us or our customers, could have an adverse effect on our business, financial condition and results of operations.
New and stricter legislation and regulations may affect our business and consolidated financial condition and results of operations.
Our business requires compliance with many laws and regulations. Increased legislative and regulatory activity and burdens, and a more stringent manner in which they are applied, could significantly impact our business and the economy as a whole. Failure to comply with these laws and regulations could subject us to lawsuits and other proceedings, and could also lead to damage awards, fines and penalties. We may become involved in a number of legal proceedings and audits, including government and agency investigations, and consumer, employment, tort and other litigation. The outcome of some of these legal proceedings, audits, and other contingencies could require us to take, or refrain from taking, actions that could harm our operations or require us to pay substantial amounts of money, harming our financial condition. Additionally, defending against these lawsuits and proceedings may be necessary, which could result in substantial costs and diversion of management’s attention and resources, harming our financial condition. There can be no assurance that any pending or future legal or regulatory proceedings and audits will not harm our business, financial condition and results of operations.
Furthermore, the regulatory environment in which we operate is still developing, and the potential exists for future legislation and regulations to be adopted. These developments may adversely affect the customers to whom, and the markets into which, we sell our products, increase our costs, require additional expenditures to ensure continued regulatory compliance and otherwise negatively affect our business, consolidated financial condition or results of operations, including in ways that cannot yet be foreseen.
Severe public health outbreaks not limited to COVID-19 may adversely impact our business.
Our business could be adversely affected by the effect of a future public health epidemic. The United States and other countries have experienced, and may experience in the future, public health outbreaks such as Zika virus, Avian Flu, SARS, H1N1 influenza, and most recently COVID-19. A prolonged occurrence of a contagious disease such as these could result in a significant downturn in the food service, hospitality and
 
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travel industries and also may result in health or other government authorities imposing restrictions on travel further impacting our end-markets. Any of these events could result in a significant drop in demand for some of our products and services and adversely affect our business.
Our annual effective income tax rate can change materially as a result of changes in our mix of U.S. and non-U.S. earnings and other factors, including changes in tax laws and changes made by regulatory authorities.
Our overall effective income tax rate is equal to our total tax expense as a percentage of total earnings before tax. However, income tax expense and benefits are not recognized on a global basis but rather on a jurisdictional or legal entity basis. Losses in one jurisdiction may not be used to offset profits in other jurisdictions and may cause an increase in our tax rate. Changes in the mix of earnings (or losses) between jurisdictions and assumptions used in the calculation of income taxes, among other factors, could have a significant effect on our overall effective income tax rate.
We are subject to taxation in multiple jurisdictions. As a result, any adverse development in the tax laws of any of these jurisdictions or any disagreement with our tax positions could have a material adverse effect on our business, consolidated financial condition or results of operations.
We are subject to taxation in, and to the tax laws and regulations of, multiple jurisdictions as a result of the international scope of our operations and our corporate and financing structure. We are also subject to transfer pricing laws with respect to our intercompany transactions, including those relating to the flow of funds among our companies. Adverse developments in these laws or regulations, or any change in position regarding the application, administration or interpretation thereof, in any applicable jurisdiction, could have a material adverse effect on our business, consolidated financial condition or results of our operations. In addition, the tax authorities in any applicable jurisdiction may disagree with the positions we have taken or intend to take regarding the tax treatment or characterization of any of our transactions. If any applicable tax authorities were to successfully challenge the tax treatment or characterization of any of our transactions, it could have a material adverse effect on our business, consolidated financial condition or results of operations.
A major loss of or disruption in our manufacturing and distribution operations or our information systems and telecommunication resources could adversely affect our business, consolidated financial condition or results of operations.
If we experienced a natural disaster, such as a hurricane, tornado, earthquake or other severe weather event, or a casualty loss from an event such as a fire or flood, at one of our larger strategic facilities or if such an event affected a key supplier, our supply chain or our information systems and telecommunication resources, then there could be a material adverse effect on our consolidated financial condition or results of operations. We are dependent on internal and third party information technology networks and systems, including the internet, to process, transmit and store electronic information. In particular, we depend on our information technology infrastructure for fulfilling and invoicing customer orders, applying cash receipts, and placing purchase orders with suppliers, making cash disbursements, and conducting digital marketing activities, data processing and electronic communications among business locations.
We also depend on telecommunication systems for communications between company personnel, our customers and our suppliers. Future system disruptions, security breaches or shutdowns could significantly disrupt our operations or result in lost or misappropriated information and may have a materially adverse effect on our business, consolidated financial condition or results of operations.
Product liability claims or regulatory actions could adversely affect our financial results or harm our reputation or the value of our brands.
Claims for losses or injuries purportedly caused by some of our products arise in the ordinary course of our business. In addition to the risk of substantial monetary judgments, product liability claims or regulatory actions could result in negative publicity that could harm our reputation in the marketplace or adversely impact the value of our brands or our ability to sell our products in certain jurisdictions. We could also be required to recall possibly defective products, or voluntarily do so which could result in adverse publicity and significant expenses. Although we maintain product liability insurance coverage, potential
 
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product liabilities claims could be excluded or exceed coverage limits under the terms of our insurance policies or could result in increased costs for such coverage.
If we are unable to retain key employees and other personnel, our consolidated financial condition or results of operations may be adversely affected.
Our success depends largely on the efforts and abilities of our management team and other key personnel. Their experience and industry contacts significantly benefit us and we need their expertise to execute our business strategies. If any of our senior management or other key personnel cease to work for us and we are unable to successfully replace any departing senior management or key personnel, our business, consolidated financial condition or results of operations may be materially adversely affected.
As a result of the substantial workers council and labor union representation in certain jurisdictions in which we operate, we will need to consult or negotiate with employee representatives on operational matters concerning the organization of our labor force, salary inflation or other benefits and re-organizations, which may lead to reduced flexibility in managing our operations and labor force to respond to opportunities, market changes or cost challenges, and we may not be able to negotiate mutually acceptable new collective bargaining agreements, which could materially affect our business.
In Europe and Latin America, most of our employees are represented by either labor unions or workers councils and are covered by collective bargaining agreements that are generally renewable on an annual basis. As is the case with any negotiation, we may not be able to negotiate acceptable new collective bargaining agreements, which could result in strikes or work stoppages by affected workers. Renewal of collective bargaining agreements could also result in higher wages or benefits paid to union members. A disruption in operations or higher ongoing labor costs could materially affect our business.
In addition, in certain jurisdictions we are required to consult with, and seek the consent or advice of these labor unions or workers councils for any changes to our activities or employee benefits. This requirement could have a significant impact on our flexibility in managing costs, responding to market changes, and reorganizing or restructuring our business. As is the case with any negotiation or consultation, we may not be able to negotiate mutually acceptable new collective bargaining agreements, which could result in delays, strained employee relations and after escalation, potential strikes or work stoppages by affected workers, each of which could materially affect our business.
We are subject to a variety of environmental and product registration laws that expose us to potential financial liability and increased operating costs.
Our operations are subject to a number of federal, state, local and non-U.S. environmental health and safety laws and regulations that govern, among other things, the manufacturing of our products, the discharge of pollutants into the air, soil and water and the use handling, transportation, storage and disposal of hazardous materials.
Many jurisdictions require us to have operating permits for our production and warehouse facilities and operations. Any failure to obtain, maintain or comply with the terms of these permits could result in fines or penalties, revocation or nonrenewal of our permits, or orders to cease certain operations, and may have a material adverse effect on our business, financial condition, results of operations and cash flows.
We generate, use and dispose of hazardous materials in our manufacturing processes. In the event our operations result in the release of hazardous materials into the environment, we may become responsible for the costs associated with the investigation and remediation of sites at which we have released pollutants, or sites where we have disposed or arranged for the disposal of hazardous wastes, even if we fully complied with environmental laws at the time of disposal. We have been, and may continue to be, responsible for the cost of remediation at some locations.
Many jurisdictions have laws and regulations that govern the registration, labeling and sale of some of our products. Throughout the world, such regulations continue to increase both in number and in stringency, resulting in, among others, extra charges for single use packaging in Europe, duplicative regulations as a result of Brexit, regulatory-driven and customer-driven ingredient bans requiring reformulation, ingredient disclosure requirements in the U.S., Asia and potentially Europe, and the incurrence of plastic levies
 
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under the European Union Multiannual Financial Framework 2021 – 2027 and Recovery Fund, all of which create a risk of increased costs and a need to modify our products.
We cannot predict with reasonable certainty the future cost to us of environmental compliance, product registration, or environmental remediation. Environmental laws have become more stringent and complex over time. Our environmental costs and operating expenses will be subject to evolving regulatory requirements and will depend on the scope and timing of the effectiveness of requirements in these various jurisdictions. As a result of such requirements, we may be subject to increased compliance costs, increasing risks and penalties associated with violations, or our inability to market some of our products in certain jurisdictions, which may have a materially adverse effect on our business, consolidated financial condition or results of operations.
Our insurance policies may not cover all operating risks and a casualty loss beyond the limits of our coverage could adversely impact our business.
Our business is subject to operating hazards and risks relating to handling, storing, transporting and the use of the products we sell. We maintain insurance policies in amounts and with coverage and deductibles that we believe are reasonable and prudent. Nevertheless, our insurance coverage may not be adequate to protect us from all liabilities and expenses that may arise from claims for personal injury, death or property damage arising in the ordinary course of business, and our current levels of insurance may not be maintained or available in the future at economical prices. If a significant liability claim is brought against us that is not adequately covered by insurance, we may have to pay the claim with our own funds, which could have a material adverse effect on our business, consolidated financial condition or results of operations.
We may be exposed to liabilities under applicable anti-corruption laws and any determination that we violated these laws could have a materially adverse effect on our business.
We are subject to various anti-corruption laws that prohibit companies and their agents from making improper payments or offers of payments for the purpose of obtaining or retaining business. We conduct business in countries and regions that are generally recognized as potentially more corrupt business environments. Activities in these countries create the risk of unauthorized payments or offers of payments by one of our employees or agents that could be in violation of various anti-corruption laws, including the Foreign Corrupt Practices Act (the “FCPA”). We have implemented safeguards and policies to discourage these practices by our employees and agents but we cannot provide assurance that our internal controls and compliance systems will always protect us from acts committed by employees or agents. If our employees or agents violate our policies or we fail to maintain adequate record keeping and internal accounting practices to accurately record our transactions we may be subject to regulatory sanctions. Violations of the FCPA or other anti-corruption laws, or allegations of such acts, could damage our reputation and subject us to civil or criminal investigations in the United States and in other jurisdictions and related shareholder lawsuits, could lead to substantial civil and criminal, monetary and nonmonetary penalties and could cause us to incur significant legal and investigatory fees which could adversely effect our business, consolidated financial condition and results of operations.
If any person in the Cayman Islands knows or suspects, or has reasonable grounds for knowing or suspecting that another person is engaged in criminal conduct or money laundering, or is involved with terrorism or terrorist financing and property, and the information for that knowledge or suspicion came to their attention in the course of business in the regulated sector, or other trade, profession, business or employment, the person will be required to report such knowledge or suspicion to (i) the Financial Reporting Authority of the Cayman Islands (“FRA”), pursuant to the Proceeds of Crime Act (As Revised) of the Cayman Islands, if the disclosure relates to criminal conduct or money laundering, or (ii) a police officer of the rank of constable or higher, or the FRA, pursuant to the Terrorism Act (As Revised) of the Cayman Islands if the disclosure relates to involvement with terrorism or terrorist financing and property.
If we are not able to protect our trade secrets or maintain our trademarks, patents and other intellectual property, we may not be able to prevent competitors from developing similar products or from marketing their products in a manner that capitalizes on our intellectual property, and this loss of a competitive advantage could decrease our profitability and liquidity.
Our ability to compete effectively with other companies depends, in part, on our ability to maintain the proprietary nature of our owned and licensed intellectual property. If we were unable to maintain the
 
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proprietary nature of our intellectual property and our significant current or proposed products, this loss of a competitive advantage could result in decreased sales or increased operating costs, either of which could have a materially adverse effect on our business, consolidated financial condition or results of operations.
We rely on trade secrets to maintain our competitive position, including protecting the formulation and manufacturing techniques of many of our products. As such, we have not sought U.S. or international patent protection for some of our principal product formulas and manufacturing processes. Accordingly, while we seek to use our protected trade secrets to defend our continued right to sell products against those seeking to assert patents on innovation that is similar to or competitive with our trade secrets, we may not be able to prevent others from developing products that are similar to or competitive with our products.
We own, or have licenses to use a large number of patents and pending patent applications on our products, aspects thereof, methods of use and/or methods of manufacturing. There is a risk that our owned and licensed patents may not provide meaningful protection and patents may never be issued for our pending patent applications.
We own, or have licenses to use the material trademark and trade name rights used in connection with the packaging, marketing and distribution of our major products where our products are principally sold. Trademark and trade name protection is important to our business. Although most of our trademarks are registered in the countries in which we operate, we may not be successful in asserting trademark or trade name protection. The costs required to protect our trademarks and trade names may be substantial.
We cannot be certain that we will be able to assert our intellectual property rights successfully in the future or that they will not be invalidated, circumvented or challenged. Other parties may infringe on or misappropriate our intellectual property rights and may thereby dilute the value of our intellectual property in the marketplace. In addition, the laws of some non-U.S. countries may not protect our intellectual property rights to the same extent as the laws of the U.S. As a result, litigation may be necessary to protect our intellectual property, and such litigation may be time-consuming and costly. We have been, and continue to be, in active intellectual property litigations.
While we take measures to protect our intellectual property and assert our intellectual property rights, we cannot be certain that our competitors will not independently develop similar technology, duplicate our products, obtain information we regard as proprietary, or design around patents issued to us or other intellectual property rights of ours. Any failure by us to protect our trade secrets, patents, trademarks and other intellectual property rights may have a materially adverse effect on our business, consolidated financial condition or results of operations.
Our products may infringe the intellectual property rights of others, which may cause us to incur unexpected costs or prevent us from selling our products.
Many of our competitors have a substantial amount of intellectual property that we must continually strive to avoid infringing. Third parties, including competitors, may assert intellectual property infringement, misappropriation or invalidity claims against us that could be upheld. Intellectual property litigation, which could result in substantial costs to and a diversion of effort by us may be necessary to protect our intellectual property rights, including trade secrets, proprietary technology or for us to defend against claimed infringement or misappropriation of the rights of others and to determine the scope and validity of our or others’ intellectual property or proprietary rights. We may not prevail in any such litigation, and if we are unsuccessful, we may be subject to monetary liability and injunctive or equitable relief, which may prevent our use of others’ intellectual property or proprietary rights if we are not able to obtain necessary licenses on reasonable terms or at all.
Although it is our policy and intention not to infringe valid patents of which we are aware and we conduct patent clearance analyses to identify patents that our new products and services might infringe as well as make necessary product or process changes to avoid infringement, we cannot provide assurances that our processes and products and other activities do not and will not infringe issued patents (whether present or future) or other intellectual property rights belonging to others. Third parties have, from time to time, asserted intellectual property-related claims against us, including claims for alleged patent infringement, and there is the continued risk that such claims may be made against our products and services or our
 
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customers’ use of our products or services. We may also be subject to indemnity claims by our business partners arising out of claims of their alleged infringement of the patents, trademarks and other intellectual property rights of third parties in connection with their use of our products and services. If we were to discover that any of our processes, technologies or products infringe on the valid intellectual property rights of others, we might determine to obtain licenses from the owners of these rights or to modify our processes or technologies or re-engineer our products in order to avoid infringement. We may not be able to obtain the necessary licenses on acceptable terms, or be able to modify our processes or technologies or re-engineer our products in a manner that is successful in avoiding infringement. Moreover, if we are sued for infringement and lose, we could be required to pay substantial damages and/or be enjoined from using or selling the infringing products or technology. Any of the foregoing could cause us to incur significant costs and prevent us from selling our products and could have an adverse effect on our financial condition and results of operations.
We rely on software from third parties, including open source software, and a failure to properly manage our use of third-party software could result in increased costs or loss of revenue.
Certain of our products are designed to include software licensed from third parties. Such third-party software includes software licensed from commercial suppliers and software licensed under public open source licenses. We have internal processes to manage our use of such third-party software. However, if we fail to adequately manage our use of third-party software, then we may be subject to copyright infringement or other third-party claims. In the case of open source software licensed under certain “copyleft” licenses, the license itself, or a court-imposed remedy for non-compliant use of the open source software, may require that parts of our proprietary software code be publicly disclosed or licensed. This could result in a loss of intellectual property rights, increased costs, damage to our reputation, and a loss of revenue.
Our inability to consummate and effectively incorporate acquisitions into our business operations may adversely affect our results of operations.
We invest time and resources into carefully assessing opportunities for acquisitions, and we continue to evaluate potential acquisition opportunities to support, strengthen and grow our business, including potentially in the near term. Despite diligence and integration planning, acquisitions still present certain risks, including the time and economic costs of integrating an acquisition’s technology, control and financial systems, unforeseen liabilities, and the difficulties in bringing together different work cultures and personnel. Although we have completed many acquisitions, there can be no assurance that we will be able to locate suitable acquisition candidates, acquire possible acquisition candidates, acquire such candidates on commercially reasonable terms, or integrate acquired businesses successfully in the future. Future acquisitions, including those we may consummate in the near term, may require us to incur additional debt and contingent liabilities, which may adversely affect our business, results of operations and consolidated financial condition. The process of integrating acquired businesses into our existing operations may result in operating, contractual and supply chain difficulties, such as the failure to retain customers or management personnel. Such difficulties may divert significant financial, operational and managerial resources from our existing operations, and make it more difficult to achieve our operating and strategic objectives.
Additionally, we may not be able to consummate acquisitions in the future on terms acceptable to us, or at all. Future acquisitions are accompanied by the risk that the obligations and liabilities of an acquired company may not be adequately reflected in the historical financial statements of that company and the risk that those historical financial statements may be based on assumptions that are incorrect or inconsistent with our assumptions or approach to accounting policies. Any of these material obligations, liabilities or incorrect or inconsistent assumptions could adversely impact our results of operations and financial condition.
We will incur significant expenses and devote other significant resources and management time as a result of being a public company, which may negatively impact our financial performance and could cause our results of operations and financial condition to suffer.
We will incur significant legal, accounting, insurance and other expenses as a result of being a public company. Laws, regulations and standards relating to corporate governance and public disclosure for public companies, including the Dodd-Frank Act, the Sarbanes-Oxley Act, regulations related thereto and the
 
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rules and regulations of the SEC and NASDAQ, will significantly increase the costs and the time that must be devoted to compliance matters. We expect that compliance with these laws, rules and regulations will substantially increase our expenses, including our legal and accounting costs, and make some activities more time-consuming and costly, and these new obligations will require attention from our senior management and could divert their attention away from the day-to-day management of our business. We also expect these laws, rules and regulations to make it more expensive for us to obtain director and officer liability insurance, and we may be required to accept reduced policy limits and coverage or incur substantially higher costs to obtain the same or similar coverage. As a result, it may be more difficult for us to attract and retain qualified persons to serve on our board of directors or as officers. As a result of the foregoing, we expect a substantial increase in legal, accounting, insurance and certain other expenses in the future, which will negatively impact our financial performance and could cause our results of operations and financial condition to suffer. Furthermore, if we are unable to satisfy our obligations as a public company, we could be subject to delisting of our subordinate voting shares, fines, sanctions and other regulatory action and potentially civil litigation.
Recently introduced economic substance legislation of the Cayman Islands may adversely impact us or our operations.
The Cayman Islands, together with several other non-European Union jurisdictions, have recently introduced legislation aimed at addressing concerns raised by the Council of the European Union as to offshore structures engaged in certain activities which attract profits without real economic activity. With effect from January 1, 2019, the International Tax Co-operation (Economic Substance) Act, (2020 Revision) (the “Substance Act”) came into force in the Cayman Islands introducing certain economic substance requirements for in-scope Cayman Islands entities which are engaged in certain “relevant activities,” which in the case of exempted companies incorporated before January 1, 2019, will apply in respect of financial years commencing July 1, 2019, onwards. As we are a Cayman Islands company, compliance obligations include filing annual notifications for the Company, which need to state whether we are carrying out any relevant activities and if so, whether we have satisfied economic substance tests to the extent required under the Substance Act. As it is a new regime, it is anticipated that the Substance Act will evolve and be subject to further clarification and amendments. We may need to allocate additional resources to keep updated with these developments, and may have to make changes to our operations in order to comply with all requirements under the Substance Act. Failure to satisfy these requirements may subject us to penalties under the Substance Act.
Our management team has limited experience managing a public company.
Many members of our management team have limited experience managing a publicly-traded company, interacting with public company investors and complying with the increasingly complex laws pertaining to public companies. Our management team may not successfully or efficiently manage us as a public company that is subject to significant regulatory oversight and reporting obligations under the federal securities laws and the continuous scrutiny of securities analysts and investors. These new obligations and constituents require significant attention from our senior management and could divert their attention away from the day-to-day management of our business, which could adversely affect our business, results of operations and financial condition.
Social unrest may materially and adversely impact our business.
In recent months, there has been increasing social unrest throughout the United States and Europe (including looting, protests, strikes and street demonstrations). We have over 85 offices, factories and warehouses located across the United States and Europe, and such social unrest could materially affect the ability of certain of these offices to operate. Prolonged disruptions because of such social unrest in the markets in which we operate could disrupt our relationships with customers, employees and referral sources located in affected areas and, in the case of our corporate office, our ability to provide administrative support services, including billing and collection services. Future civil insurrection, social unrest, protests, looting, strikes or street demonstrations may adversely affect our reputation, business and consolidated financial condition, results of operations and cash flows.
 
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Risks Related to our Indebtedness
Our substantial indebtedness makes us more sensitive to adverse economic conditions, may limit our ability to plan for or respond to significant changes in our business and requires a significant amount of cash to service our debt payment obligations that we may be unable to generate or obtain.
As of December 31, 2020, we had $2,700.3 million of total debt outstanding and up to $240.1 million of additional borrowing capacity under our revolving credit facility. In connection with this offering, we also expect to amend our revolving credit facility to increase the revolving loan commitments thereunder by $200 million. Our level of indebtedness could have important consequences on our business, including the following:

making it more difficult for us to satisfy our obligations with respect to our indebtedness;

requiring a substantial portion of our cash flows to be dedicated to debt service payments instead of other purposes, thereby reducing the amount of cash flows available for working capital, capital expenditures, acquisitions and other general corporate purposes;

limiting our ability to obtain additional financing to fund future working capital, capital expenditures, acquisitions or other general corporate requirements;

increasing our vulnerability to general adverse economic and industry conditions;

exposing us to the risk of increased interest rates as certain of our borrowings are at variable rates of interest;

exposing us to volatility between the U.S. dollar and euro as a portion of our borrowings are euro- denominated;

limiting our flexibility in planning for and reacting to changes in the industry in which we compete;

placing us at a disadvantage compared to other, less leveraged competitors; and

increasing our cost of borrowing.
Our ability to service our indebtedness will depend on our future performance, which will be affected by prevailing economic conditions and financial, business, regulatory and other factors. Some of these factors are beyond our control. If we cannot service our indebtedness and meet our other obligations and commitments, we might be required to refinance our debt or to dispose of assets to obtain funds for such purposes. We cannot guarantee that refinancing or asset dispositions could be effected on a timely basis or on satisfactory terms, if at all or would be permitted by the terms of our debt instruments.
Despite current indebtedness levels and restrictive covenants, we may still be able to incur substantially more indebtedness or make certain restricted payments, which could further exacerbate the risks associated with our substantial indebtedness.
We may be able to incur significant additional indebtedness in the future. Although the financing documents governing our indebtedness contain restrictions on the incurrence of additional indebtedness and liens, these restrictions are subject to a number of important qualifications and exceptions, and the additional indebtedness and liens incurred in compliance with these restrictions could be substantial.
The financing documents governing our indebtedness permit us to incur certain additional indebtedness, including liabilities that do not constitute indebtedness as defined in the financing documents. We may also consider investments in joint ventures or acquisitions, which may increase our indebtedness. In addition, financing documents governing our indebtedness do not restrict Bain Capital from creating new holding companies that may be able to incur indebtedness without regard to the restrictions set forth in the financing documents governing our indebtedness. If new debt is added to our currently anticipated indebtedness levels, the related risks that we face could intensify.
 
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The terms of the financing documents governing our indebtedness restrict our current and future operations, particularly our ability to respond to changes or to take certain actions.
The financing documents governing our indebtedness contain a number of restrictive covenants that impose significant operating and financial restrictions on us and may limit our ability to engage in acts that may be in our long-term best interests, including restrictions on our ability to:

incur additional indebtedness;

pay dividends on or make distributions in respect of capital stock or repurchase or redeem capital stock;

prepay, redeem or repurchase certain indebtedness;

sell or otherwise dispose of assets, including capital stock of restricted subsidiaries;

incur liens;

enter into transactions with affiliates;

enter into agreements restricting the ability of our subsidiaries to pay dividends; and

consolidate, merge or sell all or substantially all of our assets.
You should read the discussion under the heading “Description of Certain Indebtedness” for further information about these covenants.
The restrictive covenants in the financing documents governing our indebtedness require us to maintain a specified financial ratio and our ability to meet that financial ratio can be affected by events beyond our control.
A breach of the covenants or restrictions under the financing documents governing our indebtedness could result in an event of default under such documents. Such a default may allow the creditors to accelerate the related debt, which may result in the acceleration of any other debt to which a cross-acceleration or cross-default provision applies. In the event the holders of our indebtedness accelerate the repayment, we may not have sufficient assets to repay that indebtedness or be able to borrow sufficient funds to refinance it. Even if we are able to obtain new financing, it may not be on commercially reasonable terms or on terms acceptable to us. As a result of these restrictions, we may be:

limited in how we conduct our business;

unable to raise additional debt or equity financing to operate during general economic or business downturns; or

unable to compete effectively or to take advantage of new business opportunities.
These restrictions, along with restrictions that may be contained in agreements evidencing or governing other future indebtedness, may affect our ability to grow in accordance with our growth strategy.
Risks Related to Ownership of our Ordinary Shares
An active trading market for our ordinary shares may not develop and the trading price for our ordinary shares may fluctuate significantly.
Our ordinary shares have been approved for listing on NASDAQ. Prior to the completion of this offering, there has been no public market for our ordinary shares, and we cannot assure you that a liquid public market for our ordinary shares will develop. If an active public market for our ordinary shares does not develop following the completion of this offering, the market price and liquidity of our ordinary shares may be materially and adversely affected. The initial public offering price for our ordinary shares was determined by negotiation between us and the underwriters based upon several factors, and we can provide no assurance that the trading price of our ordinary shares after this offering will not decline below the initial public offering price. As a result, investors in our securities may experience a significant decrease in the value of their ordinary shares.
 
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The trading price of our ordinary shares may be volatile, which could result in substantial losses to investors.
The trading price of our ordinary shares may be volatile and could fluctuate widely due to factors beyond our control. In addition to market and industry factors, the price and trading volume for our ordinary shares may be highly volatile for factors specific to our own operations, including the following:

variations in our revenues, earnings and cash flow;

announcements of new investments, acquisitions, strategic partnerships or joint ventures by us or our competitors;

announcements of new products, services and expansions by us or our competitors;

changes in financial estimates by securities analysts;

detrimental adverse publicity about us, our products or services or our industry;

additions or departures of key members of our management team or other personnel;

release of lock-up or other transfer restrictions on our outstanding equity securities or sales of additional equity securities; and

potential litigation or regulatory investigations.
Any of these factors may result in large and sudden changes in the volume and price at which our ordinary shares will trade.
In the past, shareholders of public companies have often brought securities class action suits against those companies following periods of instability in the market price of their securities. If we were involved in a class action suit, it could divert a significant amount of our management’s attention and other resources from our business and operations and require us to incur significant expenses to defend the suit, which could harm our results of operations. Any such class action suit, whether or not successful, could harm our reputation and restrict our ability to raise capital in the future. In addition, if a claim is successfully made against us, we may be required to pay significant damages, which could have a material adverse effect on our financial condition and results of operations.
If securities or industry analysts do not publish research or reports about our business, or if they adversely change their recommendations regarding our ordinary shares, the market price for our ordinary shares and trading volume could decline.
The trading market for our ordinary shares will be influenced by research or reports that industry or securities analysts publish about our business. If one or more analysts who cover us downgrade our ordinary shares, the market price for our ordinary shares would likely decline. If one or more of these analysts cease to cover us or fail to regularly publish reports on us, we could lose visibility in the financial markets, which in turn could cause the market price or trading volume for our ordinary shares to decline.
The sale or availability for sale of substantial amounts of our ordinary shares could adversely affect their market price.
Sales of substantial amounts of our ordinary shares in the public market after the completion of this offering, or the perception that these sales could occur, could adversely affect the market price of our ordinary shares and could materially impair our ability to raise capital through equity offerings in the future. The ordinary shares sold in this offering will be freely tradable without restriction or further registration under the Securities Act, and shares held by our existing shareholders may also be sold in the public market in the future subject to the restrictions in Rule 144 and Rule 701 under the Securities Act and the applicable lock-up agreements. There will be 304,008,357 ordinary shares outstanding immediately after this offering. In connection with this offering, we and each of our directors and officers named in the section “Management,” and certain shareholders, including Bain Capital, have agreed not to sell any ordinary shares for 180 days from the date of this prospectus without the prior written consent of any two of Citigroup Global Markets Inc., Morgan Stanley & Co. LLC, Barclays Capital Inc. or J.P. Morgan Securities LLC, provided Citigroup Global Markets Inc. or Morgan Stanley & Co., LLC is one of the two consenting parties, on behalf of the underwriters, subject to certain exceptions. However, the underwriters may release these
 
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securities from these restrictions at any time, subject to applicable regulations of the Financial Industry Regulatory Authority, Inc. (“FINRA”). We cannot predict what effect, if any, market sales of securities held by our significant shareholders or any other shareholder or the availability of these securities for future sale will have on the market price of our ordinary shares. See “Underwriting (Conflict of Interest)” and “Shares Eligible for Future Sale” for a more detailed description of the restrictions on selling our securities after this offering.
Because we do not expect to pay dividends in the foreseeable future after this offering, you must rely on price appreciation of our ordinary shares for return on your investment.
We currently intend to retain all of our available funds and any future earnings after this offering to fund the development and growth of our business. As a result, we do not expect to pay any cash dividends in the foreseeable future. Therefore, you should not rely on an investment in our ordinary shares as a source for any future dividend income.
Our board of directors has complete discretion as to whether to distribute dividends. Even if our board of directors decides to declare and pay dividends, the timing, amount and form of future dividends, if any, will depend on, among other things, our future results of operations and cash flow, our capital requirements and surplus, the amount of distributions, if any, received by us from our subsidiaries, our financial condition, contractual restrictions and other factors deemed relevant by our board of directors. Accordingly, the return on your investment in our ordinary shares will likely depend entirely upon any future price appreciation of our ordinary shares. There is no guarantee that our ordinary shares will appreciate in value after this offering or even maintain the price at which you purchased our ordinary shares. You may not realize a return on your investment in our ordinary shares and you may even lose your entire investment.
You must rely on the judgment of our management as to the use of the net proceeds from this offering, and such use may not produce income or increase our share price.
Our management will have considerable discretion in the application of the net proceeds received by us. You will not have the opportunity, as part of your investment decision, to assess whether proceeds are being used appropriately. The net proceeds may be used for corporate purposes that do not improve our efforts to achieve or maintain profitability or increase our share price. The net proceeds from this offering may be placed in investments that do not produce income or that lose value.
We may be a passive foreign investment company, or “PFIC,” which could result in adverse U.S. federal income tax consequences to U.S. Holders.
Under the United States Internal Revenue Code of 1986, as amended (the “Code”), a non-U.S. corporation (such as ourselves) will be classified as a passive foreign investment company(a “PFIC”) for any taxable year if, for such year after the application of certain look-through rules with respect to subsidiaries, either

At least 75% of our gross income for the year is “passive income” ​(as described below); or

The average percentage of our assets (determined at the end of each quarter) during the taxable year which produces “passive income” or which are held for the production of “passive income” is at least 50%.
“Passive income” generally includes dividends, interest, rents, royalties (other than rents or royalties derived from the active conduct of a trade or business) and gains from the disposition of passive assets.
Based on the nature of our business, our financial statements, our expectations about the nature and amount of our income, assets and activities and the expected price of our ordinary shares in this offering, we do not expect to be a PFIC for our current taxable year. If it is determined that we are a PFIC for any taxable year (or portion thereof) that is included in the holding period of a U.S. taxpayer who holds our ordinary shares, the U.S. taxpayer may be subject to increased U.S. federal income tax liability and may be subject to additional reporting requirements.
Whether we will be a PFIC in 2021 or any future year is a factual determination that must be made annually at the close of each taxable year, and, thus, is subject to significant uncertainty, because, among
 
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other things, a determination of whether a company is a PFIC must be made annually after the end of each taxable year and will depend on the composition of our income and assets and the market value of our assets from time to time. Accordingly, there can be no assurance that we will not be a PFIC in 2021 or any future taxable year.
If we are a PFIC for any taxable year during which a U.S. Holder (as defined in “Certain Material Income Tax Considerations — U.S. Federal Income Tax Considerations”) holds our ordinary shares, we generally would continue to be treated as a PFIC with respect to that U.S. Holder for all succeeding years during which the U.S. Holder holds our ordinary shares even if we ceased to meet the threshold requirements for PFIC status, unless certain exceptions apply. Such a U.S. Holder may be subject to adverse U.S. federal income tax consequences, including (i) the treatment of all or a portion of any gain on disposition as ordinary income, (ii) the application of a deferred interest charge on such gain and the receipt of certain dividends and (iii) compliance with certain reporting requirements. There is no assurance that we will provide information that will enable investors to make a qualified electing fund election, also known as a “QEF Election,” that could mitigate the adverse U.S. federal income tax consequences should we be classified as a PFIC.
For a more detailed discussion of the application of the PFIC rules to us and the consequences to U.S. Holders if we were determined to be a PFIC, see “Certain Material Income Tax Considerations — Material U.S. Federal Income Tax Consideration — Passive Foreign Investment Company.”
The amended and restated memorandum and articles of association that we intend to adopt contain anti-takeover provisions that could have a material adverse effect on the rights of holders of our ordinary shares.
We intend to adopt an amended and restated memorandum and articles of association immediately prior to the completion of this offering. Our proposed amended and restated memorandum and articles of association contain provisions to limit the ability of others to acquire control of our company or cause us to engage in change-of-control transactions. These provisions could have the effect of depriving our shareholders of an opportunity to sell their shares at a premium over prevailing market prices by discouraging third parties from seeking to obtain control of our company in a tender offer or similar transaction. In addition, our board of directors has the authority, without further action by our shareholders, to issue preferred shares in one or more series and to fix their designations, powers, preferences, privileges, and relative participating, optional or special rights and the qualifications, limitations or restrictions, including dividend rights, conversion rights, voting rights, terms of redemption and liquidation preferences, any or all of which may be greater than the rights associated with our ordinary shares. Preferred shares could be issued quickly with terms having the effect of delaying or preventing a change in control of our company or making removal of management more difficult. If our board of directors decides to issue preferred shares, the price of our ordinary shares may fall and the voting and other rights of the holders of our ordinary shares underlying the ordinary shares may be materially and adversely affected.
Our principal shareholders have substantial influence over our company. Their interests may not be aligned with the interests of our other shareholders, and they could prevent or cause a change of control or other transactions.
Following the completion of this offering, affiliates of Bain Capital will beneficially own an aggregate of approximately 77.7% of our outstanding ordinary shares (or approximately 76.0% of our outstanding ordinary shares if the underwriters exercise in full their option to purchase additional shares). Bain Capital will have a significant influence in determining the outcome of any corporate transaction or other matter submitted to the shareholders for approval, including mergers, consolidations, the election of directors and other significant corporate actions. Bain Capital will also have the power to prevent or cause a change in control for so long as Bain Capital beneficially owns a majority of our outstanding ordinary shares and will retain significant influence over such a decision after they cease to own a majority. Without the consent of Bain Capital, we may be prevented from entering into transactions that could be beneficial to us or our minority shareholders. The interests of our largest shareholders may differ from the interests of our other shareholders. The concentration in the ownership of our ordinary shares following this offering may cause a material decline in the value of our ordinary shares.
 
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Bain Capital and its affiliates engage in a broad spectrum of activities, including investments in industries in which we operate. In the ordinary course of their business activities, Bain Capital and its affiliates may engage in activities where their interests conflict with our interests or those of our other shareholders, such as investing in or advising businesses that directly or indirectly compete with certain portions of our business or are suppliers or partners of ours. Our amended and restated memorandum and articles of association to be effective in connection with the closing of this offering will provide that none of Bain Capital, any of its affiliates or any director who is not employed by us will have any duty to refrain from engaging, directly or indirectly, in the same business activities or similar business activities or lines of business in which we operate. Bain Capital and its affiliates also may pursue acquisition opportunities that may be complementary to our business, and, as a result, those acquisition opportunities may not be available to us. In addition, Bain Capital and its affiliates may have an interest in pursuing acquisitions, divestitures and other transactions that, in its judgment, could enhance its investment, even though such transactions might involve risks to you.
You may face difficulties in protecting your interests, and your ability to protect your rights through U.S. courts may be limited, because we are incorporated under Cayman Islands law.
We are an exempted company incorporated under the laws of the Cayman Islands with limited liability. Our corporate affairs are governed by our memorandum and articles of association, the Companies Act (As Revised) of the Cayman Islands and the common law of the Cayman Islands. The rights of shareholders to take action against the directors, actions by minority shareholders and the fiduciary duties of our directors to us under Cayman Islands law are to a large extent governed by the common law of the Cayman Islands. The common law of the Cayman Islands is derived in part from comparatively limited judicial precedent in the Cayman Islands as well as from the common law of England, the decisions of whose courts are of persuasive authority, but are not binding, on a court in the Cayman Islands. The rights of our shareholders and the fiduciary duties of our directors under Cayman Islands law differ from what they would be under statutes or judicial precedent in some jurisdictions in the United States. In particular, the Cayman Islands has a less prescriptive body of securities laws than the United States. Some U.S. states, such as Delaware, have more prescriptive and judicially interpreted bodies of corporate law than the Cayman Islands. In addition, Cayman Islands companies may not have the standing to initiate a shareholder derivative action in a federal court of the United States.
Shareholders of Cayman Islands exempted companies like us have no general rights under Cayman Islands law to inspect corporate records or to obtain copies of the register of members of these companies. Our directors have discretion under our articles of association to determine whether or not, and under what conditions, our corporate records may be inspected by our shareholders, but are not obliged to make them available to our shareholders. This may make it more difficult for you to obtain the information needed to establish any facts necessary for a shareholder motion or to solicit proxies from other shareholders in connection with a proxy contest.
Certain corporate governance practices in the Cayman Islands, which is our home country, differ significantly from requirements for companies incorporated in other jurisdictions such as the U.S. Currently, we do not plan to rely on home country practice with respect to any corporate governance matter. However, if we choose to follow our home country practice in the future, our shareholders may be afforded less protection than they otherwise would under rules and regulations applicable to U.S. domestic issuers.
As a result of all of the above, public shareholders may have more difficulty in protecting their interests in the face of actions taken by our management, members of the board of directors or controlling shareholders than they would as public shareholders of a company incorporated in the United States. For a discussion of significant differences between the provisions of the Companies Act of the Cayman Islands and the laws applicable to companies incorporated in the United States and their shareholders, see “Description of Share Capital — Comparison of Cayman Islands Corporate Law and U.S. Corporate Law.”
We will incur significantly increased costs and devote substantial management time as a result of the listing of our ordinary shares.
We will incur additional legal, accounting and other expenses as a public reporting company. For example, we will be required to comply with the additional requirements of the rules and regulations of the
 
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SEC and the listing standards of NASDAQ, including applicable corporate governance practices. We expect that compliance with these requirements will increase our legal and financial compliance costs and will make some activities more time-consuming and costly. In addition, we expect that our management and other personnel will need to divert attention from operational and other business matters to devote substantial time to these public company requirements. We cannot predict or estimate the number of additional costs we may incur as a result of becoming a public company or the timing of such costs.
In addition, changing laws, regulations and standards relating to corporate governance and public disclosure are creating uncertainty for public companies, increasing legal and financial compliance costs and making some activities more time-consuming. These laws, regulations and standards are subject to varying interpretations, in many cases due to their lack of specificity, and, as a result, their application in practice may evolve over time as new guidelines are provided by regulatory and governing bodies. This could result in continuing uncertainty regarding compliance matters and higher costs necessitated by ongoing revisions to disclosure and governance practices. We intend to invest resources to comply with evolving laws, regulations and standards, and this investment may result in increased general and administrative expenses and a diversion of management’s time and attention from revenue-generating activities to compliance activities. If our efforts to comply with new laws, regulations and standards differ from the activities intended by regulatory or governing bodies due to ambiguities related to their application and practice, regulatory authorities may also initiate legal proceedings against us and our business may be adversely affected.
We are a “controlled company” and, as a result, we are exempt from obligations to comply with certain corporate governance requirements.
Upon the completion of this offering, Bain Capital will own approximately 236.4 million of our ordinary shares, or approximately 77.7% of our outstanding ordinary shares (or approximately 76.0% of our outstanding ordinary shares if the underwriters exercise in full their option to purchase additional shares). Accordingly, we will be a “controlled company” for purposes of the NASDAQ listing requirements. As such, we will be exempt from the obligation to comply with certain corporate governance requirements, including the requirements that a majority of our board of directors consists of independent directors, and that we have nominating and compensation committees that are each composed entirely of independent directors. These exemptions do not modify the requirement for a fully independent audit committee, which is permitted to be phased-in as follows: (1) one independent committee member at the time of our initial public offering; (2) a majority of independent committee members within 90 days of our initial public offering; and (3) all independent committee members within one year of our initial public offering. Similarly, once we are no longer a “controlled company,” we must comply with the independent board committee requirements as they relate to the nominating and compensation committees, on the same phase-in schedule as set forth above, with the trigger date being the date we are no longer a “controlled company” as opposed to our initial public offering date. Additionally, we will have 12 months from the date we cease to be a “controlled company” to have a majority of independent directors on our board of directors.
Pursuant to the Investor Rights Agreement that will become effective prior to the completion of this offering, Bain Capital will have the right to nominate to our board of directors: (i) a majority of the directors for so long as Bain Capital beneficially owns 40% or more of the total number of ordinary shares outstanding immediately following the completion of this offering; (ii) a number of directors (rounded up to the nearest whole number) equal to 40% of the total number of directors for so long as Bain Capital beneficially owns at least 30% and less than 40% of the total number of ordinary shares outstanding immediately following the completion of this offering; (iii) a number of directors (rounded up to the nearest whole number) equal to 30% of the total number of directors for so long as Bain Capital beneficially owns at least 20% and less than 30% of the total number of ordinary shares outstanding immediately following the completion of this offering; (iv) a number directors (rounded up to the nearest whole number) equal to 20% of the total number of directors (but not fewer than two directors) for so long as Bain Capital beneficially owns at least 10% and less than 20% of the total number of ordinary shares outstanding immediately following the completion of this offering; and (v) one director for so long as Bain Capital beneficially owns at least 2% and less than 10% of the total number of ordinary shares outstanding immediately following the completion of this offering. As a result, Bain Capital will continue to have significant influence over us even after it ceases to beneficially own a majority of our ordinary shares.
 
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You will incur immediate dilution as a result of this offering.
If you purchase ordinary shares in this offering, you will pay more for your shares than the pro forma net tangible book value of your shares. As a result, you will incur immediate dilution of $22.41 per share, representing the difference between the initial public offering price of $15.00 per share and our pro forma net tangible book deficit per share as of December 31, 2020 of $7.41. Accordingly, should we be liquidated at our book value, you would not receive the full amount of your investment. In addition, you may also experience additional dilution upon future equity issuances or the exercise of stock options to purchase ordinary shares granted to our employees, consultants and directors under our equity compensation plans. See “Dilution.”
The issuance of preferred shares could adversely affect holders of ordinary shares.
Our board of directors is authorized to issue preferred shares without any action on the part of holders of our ordinary shares. Our board of directors also has the power, without shareholder approval, to set the terms of any such preferred shares that may be issued, including voting rights, dividend rights, preferences over our ordinary shares with respect to dividends or if we liquidate, dissolve or wind up our business and other terms. If we issue preferred shares in the future that have preference over our ordinary shares with respect to the payment of dividends or upon our liquidation, dissolution or winding up, or if we issue preferred shares with voting rights that dilute the voting power of our ordinary shares, the rights of holders of our ordinary shares or the price of our ordinary shares could be adversely affected.
Certain judgments obtained against us by our shareholders may not be enforceable.
We are a Cayman Islands company and a portion our assets are located outside of the United States. As a result, it may be difficult or impossible for you to bring an action against us in the United States in the event that you believe that your rights have been infringed under U.S. federal securities laws or otherwise. Even if you are successful in bringing an action of this kind, the laws of the Cayman Islands may render you unable to enforce a judgment against our assets. We have been advised by our Cayman Islands legal counsel, Maples and Calder, that the courts of the Cayman Islands are unlikely (i) to recognise or enforce against us judgments of courts of the United States predicated upon the civil liability provisions of the securities laws of the United States or any State; and (ii) in original actions brought in the Cayman Islands, to impose liabilities against us predicated upon the civil liability provisions of the securities laws of the United States or any State, so far as the liabilities imposed by those provisions are penal in nature. In those circumstances, although there is no statutory enforcement in the Cayman Islands of judgments obtained in the United States, the courts of the Cayman Islands will recognise and enforce a foreign money judgment of a foreign court of competent jurisdiction without retrial on the merits based on the principle that a judgment of a competent foreign court imposes upon the judgment debtor an obligation to pay the sum for which judgment has been given provided certain conditions are met. For a foreign judgment to be enforced in the Cayman Islands, such judgment must be final and conclusive and for a liquidated sum, and must not be in respect of taxes or a fine or penalty, inconsistent with a Cayman Islands judgment in respect of the same matter, impeachable on the grounds of fraud or obtained in a manner, and or be of a kind the enforcement of which is, contrary to natural justice or the public policy of the Cayman Islands (awards of punitive or multiple damages may well be held to be contrary to public policy). A Cayman Islands Court may stay enforcement proceedings if concurrent proceedings are being brought elsewhere.
Risks Related to Reorganization Transactions
We will enter into a tax receivable agreement that will require us to make payments in relation to certain tax attributes of Constellation and its subsidiaries to persons who were shareholders of Constellation prior to the initial public offering and to certain other members of management, which payments are expected to be substantial.
We will indirectly acquire favorable tax attributes in connection with the Reorganization Transactions. These tax attributes would not be available to us in the absence of the consummation of the Reorganization Transactions.
 
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As part of the Reorganization Transactions, we will enter into a tax receivable agreement (the “TRA”) under which, generally, we will be required to pay to persons who were shareholders of Constellation prior to the initial public offering, and to certain other members of management (the “TRA Recipients”) as part consideration for their shares in Constellation or as part consideration for a note receivable held by them, as applicable, 85% of the savings, if any, in (x) U.S. federal, state or local income tax, and (y) Dutch income tax, in each case, that we actually realize (or are deemed to realize in certain circumstances, including as a result of certain assumptions) as a result of (i) certain United States tax attributes, including tax credits (including any foreign tax credits allowed under Section 901 or 960 of the Code), deferred interest deductions, net operating losses (“NOLs”), and amortization and depreciation deductions (and the reduction of income and gain attributable to any tax basis in any “amortizable section 197 intangibles” ​(as defined in Section 197(c) and (d) of the Code)), (ii) certain Dutch tax attributes, including deferred interest deductions, NOLs, and tax deductible depreciation and amortization deductions (and the reduction of corporate income and gain attributable to tax basis in any intangible assets, including with respect to trademark intangibles and brand name intangibles), in each case of clause (i) and (ii), generated or owned by or attributable to, as applicable, the issuer and its subsidiaries (collectively, the “Company Group”) on or prior to the date of this offering (the “IPO Date”) (calculated by assuming that the taxable year of the relevant member of the Company Group closes at the end of the IPO Date), and (iii) generally, any tax deductions available to the Company Group that relate to the transaction expenses incurred by the Company Group as a result of the consummation of this offering, regardless of when actually paid or deductible (such tax attributes, collectively, the “TRA Tax Attributes”). Under the TRA, generally, we will retain the benefit of the remaining 15% of the applicable tax savings.
The actual utilization of the TRA Tax Attributes, as well as the timing of any payments under the TRA, will vary depending upon a number of factors, including the amount, character and timing of our and our subsidiaries’ taxable income in the future and our use of NOLs. Limitations on the use of the NOLs may apply, including limitations under Section 382 of the Code and any analogous provisions of U.S. state, local, or Dutch tax law.
Payments under the TRA are not conditioned on the TRA Recipients’ continuing to own ordinary shares. In addition, the TRA will provide for interest, at a rate equal to LIBOR plus 300 basis points (subject to change if LIBOR is no longer a widely recognized benchmark rate), accrued from the due date (without extensions) of the IRS Form 1120 (or any successor form) for the U.S. members of the Company Group for the applicable taxable year until the date of payment specified by the TRA. Payments under the TRA will be based on the tax reporting positions that we determine, consistent with the terms of the TRA. No TRA Recipient will be required under any circumstances to make a payment or return a payment to the Company Group in respect of any portion of any payments previously made to such TRA Recipient under the TRA; if it is determined that excess payments have been made under the TRA, certain future payments, if any, otherwise to be made will be reduced. As a result, in certain circumstances, including, for example, if a previously claimed deduction is subsequently disallowed, payments could be made under the TRA in excess of the benefits that we actually realize in respect of the attributes to which the TRA relates.
We expect the payments we will be required to make under the TRA will be substantial. If we were to elect to terminate the TRA immediately after this offering, we estimate that we would be required to pay $270.8 million in the aggregate under the TRA.
Because the issuer of the TRA is a holding company with no operations of its own, our ability to make payments under the TRA is dependent on the ability of our subsidiaries to make distributions to us. The TRA will restrict our and our subsidiaries’ ability to enter into any agreement or indenture that would restrict or encumber our ability to make payments under the TRA. To the extent that we are unable to make payments under the TRA, and such inability is a result of the terms of debt documents (including our Senior Secured Credit Facilities or the indenture governing the Senior Notes), such payments will be deferred and will accrue interest at a rate of LIBOR plus 300 basis points (subject to change if LIBOR is no longer a widely recognized benchmark rate) until paid. There can be no assurance that we will be able to finance our obligations under the TRA in a manner that does not adversely affect our working capital and growth requirements.
 
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The TRA will contain provisions that require, in certain cases, the acceleration of payments under the TRA to the TRA Recipients, or payments which may significantly exceed the actual benefits we realize in respect of the TRA Tax Attributes.
The terms of the TRA will, in certain circumstances, including an early termination, certain changes of control or divestitures, or breaches of any material obligations under it (such as a failure to make any payment when due, subject to a specified cure period), provide for our (or our successor’s) obligations under the TRA to accelerate and become payable in a lump sum amount equal to the present value of the anticipated future tax benefits calculated based on certain assumptions, including that we would have at such time sufficient taxable income to fully utilize the TRA Tax Attributes. Additionally, if we or any of our subsidiaries transfers any asset to a corporation with which we do not file a consolidated tax return for applicable tax purposes, we will be treated as having sold that asset in a taxable transaction for purposes of determining certain amounts payable pursuant to the TRA. As a result of the foregoing, (i) we could be required to make payments under the TRA that are greater than or less than the specified percentage of the actual tax savings we realize in respect of the TRA Tax Attributes and (ii) we may be required to make an immediate lump sum payment equal to the present value of the anticipated future tax savings, which payment may be made years in advance of the actual realization of such future benefits, if any such benefits are ever realized. In these situations, our obligations under the TRA could have a substantial negative impact on our liquidity and could have the effect of adversely affecting our working capital and growth, and of delaying, deferring or preventing certain mergers, asset sales, other forms of business combinations or other changes of control. If we were to elect to terminate the TRA immediately after this offering, we estimate that we would be required to pay $270.8 million in the aggregate under the TRA.
 
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FORWARD-LOOKING STATEMENTS
This prospectus contains forward-looking statements that are subject to risks and uncertainties. All statements other than statements of historical fact included in this prospectus are forward-looking statements. Forward-looking statements give our current expectations and projections relating to our financial condition, results of operations, plans, objectives, future performance and business. You can identify forward-looking statements by the fact that they do not relate strictly to historical or current facts. These statements may include words such as “anticipate”, “estimate”, “expect”, “project”, “plan”, “intend”, “believe”, “may”, “will”, “should”, “can have”, “likely” and other words and terms of similar meaning in connection with any discussion of the timing or nature of future operating or financial performance or other events. For example, all statements we make relating to our estimated and projected costs, expenditures, cash flows, growth rates and financial results or our plans and objectives for future operations, growth initiatives, or strategies are forward-looking statements. All forward-looking statements are subject to risks and uncertainties that may cause actual results to differ materially from those that we expected, including:

the continuation of the COVID-19 pandemic may cause disruptions to our operations, customer demand, and our suppliers’ ability to support us;

uncertain global economic conditions which have had and could continue to have an adverse effect on our consolidated financial condition and results of operations;

the global nature of our operations exposes us to numerous risks that could materially adversely affect our consolidated financial condition and results of operations;

fluctuations between non-U.S. currencies and the U.S. dollar could materially impact our consolidated financial condition or results of operations;

political and economic instability and risk of government actions affecting our business and our customers or suppliers may adversely impact our business, results of operations and cash flows;

raw material pricing, availability and allocation by suppliers as well as energy-related costs may negatively impact our results of operations, including our profit margins;

if we do not develop new and innovative products or if customers in our markets do not accept them, our results would be negatively affected;

cyber risks and the failure to maintain the integrity of our operational or security systems or infrastructure;

the introduction of the Organization for Economic Cooperation and Development’s Base Erosion and Profit Shifting may adversely affect our effective rate of tax in future periods;

the consolidation of customers may adversely affect our business, consolidated financial condition or results of operations;

we experience competition in the markets for our products and services and in the geographic areas in which we operate;

instability and uncertainty in the credit and financial markets could adversely impact the availability of credit that we and our customers need to operate our business;

new and stricter regulations may affect our business and consolidated condition and results of operations; and

the other risks described under “Risk Factors”.
We derive many of our forward-looking statements from our operating budgets and forecasts, which are based on many detailed assumptions. While we believe that our assumptions are reasonable, we caution that it is very difficult to predict the impact of known factors, and it is impossible for us to anticipate all factors that could affect our actual results. Important factors that could cause actual results to differ materially from our expectations, or cautionary statements, are disclosed under “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in this prospectus. All written and oral forward-looking statements attributable to us, or persons acting on our behalf, are expressly qualified in their entirety by these cautionary statements as well as other cautionary statements that are made from
 
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time to time in our other SEC filings and public communications. You should evaluate all forward-looking statements made in this prospectus in the context of these risks and uncertainties.
We caution you that the important factors referenced above may not contain all of the factors that are important to you. In addition, we cannot assure you that we will realize the results or developments we expect or anticipate or, even if substantially realized, that they will result in the consequences or affect us or our operations in the way we expect. The forward-looking statements included in this prospectus are made only as of the date hereof. We undertake no obligation to update or revise any forward-looking statement as a result of new information, future events or otherwise, except as otherwise required by law.
 
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MARKET AND INDUSTRY DATA
Unless otherwise indicated, information in this prospectus concerning economic conditions, our industry, our markets and our competitive position is based on a variety of sources, including information from independent industry analysts and publications, as well as our own estimates and research. This information involves a number of assumptions and limitations, and you are cautioned not to give undue weight to such estimates. While we believe the information presented in this prospectus is generally reliable, forecasts, assumptions, expectations, beliefs, estimates and projects involve risk and uncertainties and are subject to change based on various factors, including those described under “Forward-Looking Statements” and “Risk Factors”.
 
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USE OF PROCEEDS
We estimate that our net proceeds from this offering will be approximately $651.7 million (or approximately $750.7 million if the underwriters’ option to purchase additional shares is exercised in full), at the initial public offering price of $15.00 per share after deducting the underwriting discount and estimated offering expenses payable by us.
The principal purposes of this offering are to repay outstanding indebtedness, create a public market for our ordinary shares and enable access to the public equity markets for us and our shareholders. We expect to use approximately $651.7 million of net proceeds of this offering (or $750.7 million of the net proceeds of this offering if the underwriters exercise their option to purchase additional shares in full) to repay outstanding borrowings, including fees and expenses under our Senior Secured Credit Facilities.
As of December 31, 2020, we had $2,169.5 million of indebtedness outstanding under our Term Loan Facility. At December 31, 2020, the interest rate for the U.S. dollar term loan was 3.21% and the interest rate for the Euro term loan was 3.25%. Our Term Loan Facility matures on September 6, 2024. See “Description of Certain Indebtedness.”
The foregoing represents our current intentions with respect to the use and allocation of the net proceeds of this offering based upon our present plans and business conditions, but our management will have significant flexibility and discretion in applying the net proceeds. The occurrence of unforeseen events or changed business conditions could result in application of the net proceeds of this offering in a manner other than as described in this prospectus.
 
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DIVIDEND POLICY
We currently intend to retain all available funds and any future earnings to fund the development and growth of our business and to repay indebtedness and, therefore, we do not anticipate paying any cash dividends in the foreseeable future. Additionally, our ability to pay dividends on our ordinary shares is limited by restrictions on the ability of our subsidiaries to pay dividends or make distributions to us under the terms of our Senior Secured Credit Facilities and the indenture governing our Senior Notes. Any future determination to pay dividends will be at the discretion of our board of directors, subject to compliance with covenants in current and future agreements governing our and our subsidiaries’ indebtedness, and will depend on our results of operations, financial condition, capital requirements and other factors that our board of directors may deem relevant.
 
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REORGANIZATION TRANSACTIONS
The issuer, Diversey Holdings, Ltd., an exempted company incorporated under the laws of the Cayman Islands with limited liability, was formed on November 3, 2020 for the purpose of completing the offering contemplated by this prospectus and related transactions in order to carry on the business of Constellation and its subsidiaries. The issuer will serve as a holding company in our corporate structure. The issuer has not engaged in any business or other activities other than those incident to its formation, the Reorganization Transactions described below and the preparation of the registration statement of which this prospectus forms a part.
Prior to the closing of this offering, we will effect a series of transactions pursuant to which:
(i)
Constellation (BC) PoolCo SCA (“Poolco”), an entity incorporated for the purpose of pooling the interests of our employees, directors and officers in Constellation (BC) S.à r.l (“Topco”), a direct subsidiary of Constellation, will repurchase shares from certain equityholders in exchange for a note receivable;
(ii)
all other equityholders of Poolco will contribute their shares of Poolco to Constellation in exchange for new shares of Constellation; and
(iii)
the equityholders of Constellation, including Bain Capital and the individuals referred to in the foregoing clause (ii), will contribute a portion of their shares of Constellation to the issuer, and the equityholders referred to in the foregoing clause (i) will contribute a portion of their note receivable to the issuer, in each case, in exchange for ordinary shares of the issuer (provided that the issuer will withhold a portion of the ordinary shares otherwise issuable solely to the extent necessary to satisfy (y) any outstanding loans owned by such employee equityholders and (z) Any tax consequences resulting to the equityholders from the repurchase and the aggregate fair market value of such withheld ordinary shares will be paid by the issuer or a subsidiary thereof to satisfy such tax consequence) and the equityholders of Constellation, including Bain Capital and the individuals referred to in the foregoing clause (ii), will contribute the remaining portion of their shares of Constellation to one of our subsidiaries, and the equityholders referred to in the foregoing clause (i) will contribute the remaining portion of their note receivable to one of our subsidiaries, in each case, in exchange for payments to be made under the Tax Receivable Agreement and certain other consideration.
The foregoing transactions will result in the issuer becoming the ultimate parent company of Constellation and its subsidiaries, and Bain capital and all other equityholders of Constellation and Poolco becoming shareholders of the issuer. We refer to these transactions as the “Reorganization Transactions.” The purpose of the Reorganization Transactions is to reorganize our corporate structure so that the top-tier entity in our corporate structure — the entity that is offering ordinary shares to the public in this offering — is a company organized under the laws of the Cayman Islands and so that our existing investors will own our ordinary shares. Following the completion of this offering, in order to simplify our corporate structure, we expect to merge or liquidate certain of our wholly-owned subsidiaries, including Constellation, Poolco and Topco.
Following the consummation of the Reorganization Transactions and prior to the closing of this offering, there will be 257,854,511 ordinary shares outstanding.
 
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The following diagram summarizes our organizational structure immediately prior to giving effect to the Reorganization Transactions.
[MISSING IMAGE: tm2035458d11-fc_baincapbw.jpg]
 
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The following diagram summarizes our organizational structure immediately following completion of the Reorganization Transactions.
[MISSING IMAGE: tm2035458d11-fc_sharebasebw.jpg]
 
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CAPITALIZATION
The following table describes our cash and cash equivalents and capitalization as of December 31, 2020, as follows:

on an actual basis; and

on a pro forma basis, after giving effect to (i) the Reorganization Transactions, (ii) the lump sum payment of approximately $17.5 million payable in connection with the termination of the management agreement with Bain Capital, as described under “Certain Relationships and Related Party Transactions — Management Agreement,” ​(iii) the sale of 46,153,846 ordinary shares in this offering and (iv) the application of the net proceeds from this offering as set forth under “Use of Proceeds”, and after deducting the underwriting discount and estimated offering expenses payable by us.
The pro forma information set forth in the table below is illustrative only and will be adjusted based on the actual initial public offering price and other terms of this offering determined at pricing. You should read this table in conjunction with our consolidated financial statements and the related notes, “Use of Proceeds” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included elsewhere in this prospectus.
As of December 31, 2020
(in millions)
Actual
Pro Forma
(unaudited)
Cash and cash equivalents
$ 192.9 $ 173.0
Total debt:
Senior Secured Credit Facilities(1):
US Dollar Term Loan
873.0 873.0
US Dollar Incremental Loan
149.6
Euro Term Loan
1,146.9 644.8
Revolving Credit Facility(2)
Senior Notes
548.5 548.5
Short-term borrowings
0.4 0.4
Finance lease obligations
5.2 5.2
Financing obligations
22.5 22.5
Unamortized deferred financing costs
(39.6) (31.2)
Unamortized original issue discount
(6.2) (2.2)
Total debt(1)
$ 2,700.3 $ 2,061.0
Preferred Equity Certificates
$ 641.7 $
Shareholders’ Equity:
Common stock, $0.01 par value per share; 195,800,697 shares authorized and        outstanding, actual(3)
$ 2.2 $
Ordinary shares, $0.0001 par value per share; 5,000,000 shares authorized and 1 share outstanding, actual; 1,000,000,000 shares authorized and 304,008,357 shares outstanding, pro forma(4)
Preferred shares, $0.0001 par value per share; no shares authorized or outstanding, actual; 200,000,000 shares authorized and no shares outstanding, pro forma
Additional paid-in capital
247.2 1,370.4
Accumulated deficit
(545.3) (633.3)
Accumulated other comprehensive loss
(212.7) (212.7)
Total shareholders' equity
$ (508.6) $ 524.4
(1)
We expect to use approximately $651.7 million of net proceeds of this offering (or $750.7 million of the
 
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net proceeds of this offering if the underwriters exercise their option to purchase additional shares in full) to repay outstanding borrowings, including fees and expenses, under our Senior Secured Credit Facilities.
(2)
In connection with this offering, we expect to amend our Revolving Credit Facility to provide for an incremental $200 million of revolving loan commitments and extend the maturity of the Revolving Credit Facility to the fifth anniversary of the amendment, subject to earlier maturity in certain cases. See “Description of Certain Indebtedness — Senior Secured Credit Facilities — Second Amendment to Credit Agreement.” We will pay a fee of approximately $2.4 million in connection with the amendment.
(3)
Represents shareholders' equity of Constellation.
(4)
Represents shareholders' equity of the issuer.
Except as otherwise indicated, the above discussion and table are based on 257,854,511 ordinary shares outstanding as of March 1, 2021, on a pro forma basis after giving effect to the Reorganization Transaction, and excludes:

1,047,949 ordinary shares issuable upon the vesting and settlement of restricted share units to be granted in connection with this offering, and

13,952,051 ordinary shares reserved for future issuance under our 2021 Omnibus Incentive Plan.
 
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DILUTION
If you invest in our ordinary shares in this offering, your interest will be diluted to the extent of the difference between the initial public offering price per share of our ordinary shares in this offering and the pro forma net tangible book deficit per share of our ordinary shares immediately after this offering.
As of December 31, 2020, we had a net tangible book deficit of $3,288.0 million, or $12.75 per ordinary share. Net tangible book deficit per share is equal to our total tangible assets, less total liabilities, divided by the number of our outstanding ordinary shares.
After giving effect to the sale of ordinary shares in this offering, after deducting the underwriting discount and estimated offering expenses payable by us, and the application of the net proceeds of this offering to repay indebtedness as set forth under “Use of Proceeds”, our pro forma net tangible book deficit as of December 31, 2020 would have been $2,254.0 million, or $7.41 per ordinary share. This represents an immediate decrease in net tangible book deficit of $5.34 per share to our existing shareholders and an immediate dilution in net tangible book deficit of $22.41 per share to investors participating in this offering at the initial public offering price. The following table illustrates this per share dilution:
Initial public offering price per share of ordinary shares
$ 15.00
Net tangible book deficit per share before offering
(12.75)
Decrease in net tangible book deficit per share attributable to the investors in this offering
5.34
Pro forma net tangible book deficit per share after giving effect to this offering
(7.41)
Dilution in net tangible book deficit per share to the investors in this offering
$ 22.41
If the underwriters exercise their option to purchase additional shares in full, the pro forma net tangible book deficit per share after this offering would be $5.50 and the dilution in pro forma net tangible book deficit per share to new investors in this offering would be $22.25.
The following table presents, on a pro forma basis as described above, as of December 31, 2020, the differences between our existing shareholders and the investors purchasing ordinary shares in this offering, with respect to the number of shares purchased, the total consideration paid to us, and the average price per share paid by our existing shareholders or to be paid to us by investors purchasing shares in this offering at the offering price of $15.00 per share before deducting the underwriting discount and estimated offering expenses payable by us.
Shares Purchased
Total Consideration
Average
Price Per
Share
Number
Percentage
Amount
Percentage
Existing Shareholders
257,854,511 84.8% $ 914,852,208 56.9% $ 3.55
New Investors
46,153,846 15.2% 692,307,690 43.1% $ 15.00
Total
304,008,357 100.0% 1,607,159,898 100.0%
Except as otherwise indicated, the above discussion and tables assume no exercise of the underwriters’ option to purchase additional shares. After giving effect to sales of shares in this offering, assuming the underwriters’ option to purchase additional shares is exercised in full, our existing shareholders would own 82.9% and our new investors would own 17.1% of the total number of ordinary shares outstanding after this offering.
In addition, to the extent we issue any additional share options or any share options are exercised, or we issue any other securities or convertible debt in the future, investors participating in this offering may experience further dilution.
Except as otherwise indicated, the above discussion and tables are based on 257,854,511 ordinary shares outstanding as of March 1, 2021, on a pro forma basis after giving effect to the Reorganization Transaction, and excludes:

1,047,949 ordinary shares issuable upon vesting and settlement of restricted share units to be granted in connection with this offering; and

15,000,000 ordinary shares reserved for future issuance under the 2021 Omnibus Incentive Plan.
 
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UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL INFORMATION
The unaudited pro forma condensed consolidated balance sheet as of December 31, 2020 and the unaudited pro forma condensed consolidated statement of operations for the year ended December 31, 2020 present our financial position and results of operations after giving pro forma effect to:

the Reorganization Transactions and this offering as if such events occurred on December 31, 2020 for the unaudited pro forma condensed consolidated balance sheet and on January 1, 2020 for the unaudited pro forma condensed consolidated statement of operations. Pursuant to the Reorganization transactions:
(i)
Constellation (BC) PoolCo SCA (“Poolco”), an entity incorporated for the purpose of pooling the interests of our employees, directors and officers in Constellation (BC) S.à r.l (“Topco”), a direct subsidiary of Constellation, will repurchase shares from certain equityholders in exchange for a note receivable;
(ii)
all other equityholders of Poolco will contribute their shares of Poolco to Constellation in exchange new shares of Constellation; and
(iii)
the equityholders of Constellation, including Bain Capital and the individuals referred to in the foregoing clause (ii), will contribute a portion of their shares of Constellation to the issuer, and the equityholders referred to in the foregoing clause (i) will contribute a portion of their note receivable to the issuer, in each case, in exchange for ordinary shares of the issuer (provided that the issuer will withhold a portion of the ordinary shares otherwise issuable solely to the extent necessary to satisfy (y) any outstanding loans owned by such employee equityholders and (z) any tax consequences resulting to the equityholders from the repurchase and the aggregate fair market value of such withheld ordinary shares will be paid by the issuer or a subsidiary thereof to satisfy such tax consequence) and the equityholders of Constellation, including Bain Capital and the individuals referred to in the foregoing clause (ii), will contribute the remaining portion of their shares of Constellation to one of our subsidiaries, and the equityholders referred to in the foregoing clause (i) will contribute the remaining portion of their note receivable to one of our subsidiaries, in each case, in exchange for payments to be made under the Tax Receivable Agreement and certain other consideration.

repayment of outstanding borrowings, including fees and expenses, under our Senior Secured Credit Facilities; and

a provision or benefit for corporate income taxes on the loss before income tax provision based on the tax laws for the jurisdictions where the income (loss) amounts are allocated.
The unaudited pro forma condensed consolidated balance sheet as of December 31, 2020 has been derived from our audited historical consolidated balance sheet as of December 31, 2020 included elsewhere in this prospectus. The unaudited pro forma condensed consolidated statement of operations for the year ended December 31, 2020 has been derived from our audited historical consolidated statement of operations for the year ended December 31, 2020 included elsewhere in this prospectus.
The unaudited pro forma consolidated financial statements are not necessarily indicative of financial results that would have been attained had the described transactions occurred on the dates indicated above or that could be achieved in the future. The unaudited pro forma consolidated financial information also does not give effect to the potential impact of any anticipated synergies, operating efficiencies or cost savings that may result from the transactions. Future results may vary significantly from the results reflected in the unaudited pro forma consolidated statement of operations and should not be relied on as an indication of our results after the consummation of the Reorganization Transactions and this offering. However, management believes that the assumptions provide a reasonable basis for presenting the significant effects of the transactions as contemplated and that the pro forma adjustments give appropriate effect to those assumptions and are properly applied in the unaudited pro forma consolidated financial statements.
As a public company, we will be implementing additional procedures and processes for the purpose of addressing the standards and requirements applicable to public companies. We expect to incur additional
 
54

 
annual expenses related to these steps and, among other things, additional directors’ and officers’ liability insurance, director fees, fees to comply with the reporting requirements of the SEC, transfer agent fees, hiring of additional accounting, legal and administrative personnel, increased auditing and legal fees and similar expenses. We have not included any pro forma adjustments relating to these costs.
The unaudited pro forma condensed consolidated financial information should be read together with “Use of Proceeds,” “Capitalization,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” “Certain Relationships and Related Person Transactions” and the historical consolidated financial statements and related notes thereto included elsewhere in this prospectus.
Unaudited Pro Forma Condensed Consolidated Balance Sheet
As of December 31, 2020
(in millions)
Constellation
(BC) 2 S.à.r.l.
As Reported
Reorganization
Transactions
Adjustments
(a)
Offering
Adjustments
(a)
Diversey
Holdings, Ltd.
Pro Forma (b)
Assets
Current assets:
Cash and cash equivalents
$ 192.9 $ (19.9)
(8,11)
$
(9,10)
$ 173.0
Trade receivables
342.0 342.0
Other receivables
71.0 71.0
Inventories
282.4 282.4
Prepaid expenses and other current
assets
62.0 (1.0)
(12)
61.0
Total current assets
950.3 (19.9) (1.0) 929.4
Property and equipment
188.3 188.3
Goodwill
467.0 467.0
Intangible assets
2,311.4 2,311.4
Other non-current assets
369.1 (1.6)
(6,11)
367.5
Total assets
$ 4,286.1 $ (21.5) $ (1.0) $ 4,263.6
Liabilities and Shareholders’ equity
Current liabilities:
Short-term borrowings
$ 0.4 $ $ $ 0.4
Current portion of long-term debt
13.2 (1.5)
(10)
11.7
Accounts payable
404.6 16.3
(7,11)
420.9
Accrued restructuring costs
26.3 26.3
Other current liabilities
512.4 (51.2)
(4,6)
461.2
Total current liabilities
956.9 (34.9) (1.5) 920.5
Long-term debt, less current portion
2,686.7 (637.8)
(10)
2,048.9
Preferred equity certificates
641.7 (641.7)
(2)
Deferred taxes
181.1 181.1
Tax receivable agreement liability
260.4
(3)
260.4
Other non-current liabilities
328.3 328.3
Total liabilities
4,794.7 (416.2) (639.3) 3,739.2
Shareholders’ equity:
Common stock
2.2 (2.2)
(1)
Ordinary shares
(1)
(9)
Additional paid-in capital
247.2 472.5
(1,2,3,4,5,6)
650.7
(9,12)
1,370.4
Accumulated deficit
(545.3) (75.6)
(5,7,8,11)
(12.4)
(10)
(633.3)
Accumulated other comprehensive
loss
(212.7) (212.7)
Total Shareholders’ equity
(508.6) 394.7 638.3 524.4
Total liabilities and Shareholders’ equity 
$ 4,286.1 $ (21.5) $ (1.0) $ 4,263.6
 
55

 
Unaudited Pro Forma Condensed Consolidated Statement of Operations
For the year ended December 31, 2020
(in millions, except per share amounts)
Constellation
(BC) 2 S.à. r.l.
As Reported
Reorganization
Transaction
Adjustments (a)
Offering
Adjustments
(a)
Diversey
Holdings, Ltd.
Pro Forma (b)
Net sales
$ 2,629.2 $ $ $ 2,629.2
Cost of sales
1,559.4 1,559.4
Gross profit
$ 1,069.8 1,069.8
Selling, general and administrative expenses
768.2 22.8
(7,11)
5.5
(13)
796.5
Transition and transformation costs
42.5 17.5
(8)
60.0
Management fee
7.5 7.5
Share-based compensation
67.5 65.6
(5)
5.0
(13)
138.1
Amortization of intangible assets
98.2 98.2
Restructuring costs
25.6 25.6
Merger and acquisition-related costs
1.0 1.0
Operating income (loss)
59.3 (105.9) (10.5) (57.1)
Interest expense
127.7 (22.2)
(14)
105.5
Foreign currency loss related to Argentina subsidiaries
1.6 1.6
Other (income) expense, net
(40.7) (40.7)
Income (loss) before income tax provision (benefit)
(29.3) (105.9) 11.7 (123.5)
Income tax provision (benefit)
9.2 (5.7)
(15)
2.9