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Confidential Treatment requested by Diversey Holdings, Ltd.
Pursuant to 17 C.F.R. Section 200.83
As submitted confidentially to the Securities and Exchange Commission on January 15, 2021 pursuant to the Jumpstart Our Business Startups Act of 2012. This draft registration statement has not been publicly filed with the Securities and Exchange Commission and all information herein remains strictly confidential.
No. 333-         
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
Diversey Holdings, Ltd.
(Exact name of registrant as specified in its charter)
Cayman Islands
(State or other jurisdiction of
incorporation or organization)
2842
(Primary Standard Industrial
Classification Code Number)
Not applicable
(I.R.S. Employer
Identification No.)
1300 Altura Road, Suite 125
Fort Mill, South Carolina 29708
Telephone: (803) 746-2200
(Address, including zip code, and telephone number, including area code, of registrant’s principal executive offices)
Philip Wieland
Chief Executive Officer
1300 Altura Road, Suite 125
Fort Mill, South Carolina 29708
Telephone: (803) 746-2200
(Name, address, including zip code, and telephone number, including area code, of agent for service)
Copies of all communications, including communications sent to agent for service, should be sent to:
Bradley C. Reed, P.C.
Alexander M. Schwartz
Kirkland & Ellis LLP
300 North LaSalle
Chicago, IL 60654
(312) 862-2000
Thomas Holden
Rachel D. Phillips
Ropes & Gray LLP
3 Embarcadero Center
San Francisco, CA 94111
(415) 315-6300
Approximate date of commencement of proposed sale to the public: As soon as practicable after this Registration Statement becomes effective.
If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, check the following box: ☐
If this Form is filed to registered additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ☐
If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ☐
If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ☐
If delivery of the prospectus is expected to be made pursuant to Rule 434, please check the following box. ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

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Confidential Treatment requested by Diversey Holdings, Ltd.
Pursuant to 17 C.F.R. Section 200.83
Large accelerated filer
Accelerated Filer
Non-accelerated filer
Smaller Reporting Company
Emerging Growth Company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 7(a)(2)(B) of the Securities Act. ☐
CALCULATION OF REGISTRATION FEE
Title of Each Class of Securities to be Registered
Proposed
Maximum Aggregate
Offering(1)(2)
Amount of
Registration Fee
Ordinary shares, par value $      per share
$         
$
         
(1)
Includes the aggregate offering price of shares of ordinary shares subject to the underwriters’ option to purchase additional shares.
(2)
Estimated solely for purposes of computing the amount of the registration fee pursuant to Rule 457(o) under the Securities act of 1933, as amended.
The registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities act of 1933 or until this Registration Statement shall become effective on such date as the Commission, acting pursuant to said Section 8(a), may determine.

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The information in this preliminary prospectus is not complete and may be changed. These securities may not be sold until the registration statement filed with the Securities and Exchange Commission is effective. The preliminary prospectus is not an offer to sell nor does it seek an offer to buy these securities in any jurisdiction where the offer and sale is not permitted.
Confidential Treatment requested by Diversey Holdings, Ltd.
Pursuant to 17 C.F.R. Section 200.83
Subject to Completion
Preliminary Prospectus dated            , 2021.
            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. It is currently estimated that the initial public offering price per share will be between $      and $      . We have applied to list our ordinary shares on the                   under the symbol “           .”
See “Risk Factors” beginning on page 18 to read about factors you should consider before buying our ordinary shares.
Immediately after this offering, assuming an offering size as set forth above, investment funds controlled by our equity sponsor, Bain Capital Private Equity, will own approximately    % of our outstanding ordinary shares (or    % 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 the             . 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
$         $     
Underwriting discount(1)
$ $
Proceeds, before expenses, to Diversey Holdings, Ltd
$ $
(1)
See “Underwriting” for a description of compensation payable to the underwriters.
To the extent that the underwriters sell more than                ordinary shares, the underwriters have the option to purchase up to an additional                ordinary shares at the initial public offering price less the underwriting discount.
The underwriters expect to deliver the ordinary shares to purchasers on            , 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
Prospectus dated            , 2021

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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.
 
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Confidential Treatment requested by Diversey Holdings, Ltd.
Pursuant to 17 C.F.R. Section 200.83
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 our equity sponsor. Bain Capital Private Equity (“Bain Capital,” “Bain Capital Private Equity” or our “Sponsor”) and its affiliates, (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. Prior to the consummation of this offering, the issuer will consummate certain reorganization transactions pursuant to which existing equity holders of Constellation, including Bain Capital, will contribute their interests in Constellation to the issuer in exchange for ordinary shares of the issuer (the “Reorganization Transactions”).
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. We have not included the historical financial statements of the issuer in this prospectus because the issuer was formed after the periods covered by the financial statements included in this prospectus, has engaged to date only in activities in contemplation of this offering and has had no operations or assets prior to the completion of the Reorganization Transactions. 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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Confidential Treatment requested by Diversey Holdings, Ltd.
Pursuant to 17 C.F.R. Section 200.83
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.”
Company Overview
Our Mission.    Diversey’s mission is to protect and care for people through leading hygiene, infection prevention and cleaning solutions. We develop mission-critical and customer-centric 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 and innovation. Our fully-integrated suite of solutions combines chemicals, dosing and dispensing equipment, cleaning machines, services and digital analysis. These solutions serve more than 85,000 customers in over 80 countries via our vast network of more than 1,400 technicians and 8,500 employees globally. We are a leading global provider to the approximately $32 billion cleaning and hygiene industry for Institutional and Food & Beverage markets, where we hold the first or second position in the key markets in which we operate. As one of only two large global players offering a full suite of cleaning products and services, including the ability to serve large, global strategic accounts (“GSAs”), we consider our scale to be a distinct competitive advantage, given the fragmentation of our industry.
Our Value Proposition.   We deliver hygiene, infection prevention, and cleaning solutions that help our customers maintain their brand integrity and grow their businesses. We are a solutions-oriented business that provides end-to-end, repeatable services, and 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 customer engagement model drives a virtuous circle of customer acquisition, service expansion, and long-term retention that enables our business’s strong history of growth and resiliency:

Understand a Customer’s Needs and Goals.   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 from a library of +2,000 unique chemical formulations and an extensive, differentiated suite of equipment and machines with over +1,400 patents.

Integrate Solutions with Customer Workflow.   We train end users on operating the products and equipment that make up our customized solutions, with a specific focus on health and safety considerations and service requirements.

Optimize Performance.   After implementation, we stay engaged with customers on a regular basis and leverage our digital monitoring capabilities to ensure 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 service through new products and innovation, creating ‘win-win’ solutions for Diversey and our customers.
 
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We are in a unique position to deliver this value proposition due to the following attributes of our business model:

One of only two large global players that offers a full suite of cleaning and hygiene solutions

Flexible go-to-market strategy that meets the needs of our diverse customer base:

Direct-selling capabilities and high-touch service offerings to meet the unique needs of large, global customers who require complex end-to-end solutions

Multi-channel distribution network that efficiently serves smaller, regional customers who require less customized solutions

Robust innovation engine that has led to Diversey having one the most extensive libraries of cutting-edge offerings, allowing us to deliver the custom solutions discussed above.
The strength of our value proposition is evidenced by our deep customer relationships with a total retention rate of over 97%, and 100% retention of our top 100 customers, in 2019.
The below graphics show our customer engagement model and an illustrative example of our comprehensive suite of cleaning, hygiene, and infection prevention solutions.
Our Customer Engagement Model
Where Diversey Adds Value – End-to-End Cleaning,
Hygiene, and Infection Prevention Solutions
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Our Resilient Business Model.   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
 
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and the 2019 – 2020 COVID-19 pandemic. Diversey’s revenues declined only 0.3% from 2008 – 2010, while revenues for the S&P 500 were down 3.8% over the same period. Through the more recent COVID-19 pandemic, Diversey experienced a year-over-year revenue gain of 1.9% vs. 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 required for our customers to meet health and safety regulations for all locations in operation, regardless of end consumer demand for our customers’ products and services.

Small Customer Spend Relative to Total Cost of System.   While mission critical, our products represent only a small portion of our customers’ total cleaning costs.

Highly-Consumable Product and Service Offerings.   Our products are consumable and require ongoing service and monitoring, resulting in highly recurring revenue.

Customer, Product, and Geographic Diversification.   We serve our customers across ~290,000 global sites, with no individual product or service representing more than 1% of net sales for the year ended December 31, 2019. 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, 2019.
Our Transformation.   Since becoming an independent company after the 2017 Sealed Air carve-out transaction, Diversey has undergone a significant transformation. We have made many strategic investments to establish the foundation for sustainable, long-term profitability. These include:

New Senior Leadership.   Strengthened our organization with new talent including a new CEO, CFO, CSO, CIO, CRO, CHRO, Head of EUR, and Head of North Asia, among others, to lead Diversey through operational expertise and instill a competitive and winning culture

Investment in Systems and Technology.   Made approximately $50 million in investments to provide better visibility, control, and technology to drive the business

Strategic and Commercial Focus.   Created clear focus and alignment around our core strategic initiatives (Infection Prevention, US Food Service, Emerging Markets, and Water Treatment) and improved innovation, planning and pricing processes

Operational Excellence.   Upgraded talent and instilled a culture of continuous improvement and efficiency gains in order to optimize G&A, procurement and supply chain

M&A.   Executed six strategic acquisitions since 2017 to help establish footholds in key markets, including enhancements to our Infection Prevention business
This transformation has resulted in a significant change in our profitability and growth profile. For the year ended December 31, 2017 Diversey generated net loss of $158 million and Adjusted EBITDA of $310 million at 12% margin, compared to net loss of $109 million and Adjusted EBITDA of $340 million at 13% margin for the year ended December 31, 2019, which implies a 5% EBITDA compound annual growth rate. For a definition of Adjusted EBITDA and a reconciliation of net income (loss) to Adjusted EBITDA see “Summary — Summary Condensed Consolidated and Combined Financial Data’’.
Our Growth.   Our business transformation has resulted in rapid and multifaceted EBITDA growth. Key components 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 and their consumers.

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

M&A.   Enhanced execution capabilities have enabled us to complete 6 strategic acquisitions.
Our Financial Attributes.   We believe that our business model results in an attractive financial profile highlighted by our history of stable and diversified revenue streams and strong unlevered cash flow generation, which we define as Adjusted EBITDA plus net change in operating working capital minus capital expenditures. 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, 2019, we generated net sales of $2.6 billion, Adjusted EBITDA of $340 million, and unlevered cash flow of approximately 67%, with total indebtedness of $2,522.5 million as of December 31, 2019.
Diversey Sustainability Strategy
Since our founding, sustainability has been core to everything we do. We partner with our customers to help them save money, conserve energy, reduce resource usage, and eliminate waste. These focus areas are inherent to our business model. Not only do they make good business sense, but they also are good for the environment. We are constantly creating “win-win-win” solutions that benefit the environment, our customers, and Diversey.
An example of this type of “win-win-win” solution is when we work with customers to optimize and standardize the amount of chemicals customers use in their cleaning operations. Customers often struggle with proper chemical to water ratios and / or lack the means necessary to ensure dosing standards are precisely followed across facilities. At the user level, this often leads to “over” or “under-dosing” and hence inability to optimally clean, disinfect, and / or sanitize. Our end-to-end solutions ensure the right chemical is used and the right dosing equipment and training are in place to consistently deliver the right amounts of chemicals. This reduces resource usage, saves money, and helps Diversey strengthen partnerships with customers.
Our “Facilitators for Life” sustainability strategy sets ambitious goals for our operations as well as ensuring we are assisting our customers in achieving their sustainability objectives.

Our operations:   We have established 12 specific 2025 targets to measure our progress in improving the environment, protecting and caring for people, and continuing to innovate sustainable solutions. These targets include a 10% reduction in energy, greenhouse gas emissions, and waste, as well as a 5% reduction in water use.

Assisting our customers in achieving their sustainability objectives:   Core to our value proposition is the value we help customers achieve from environmental and efficiency improvements. We are committed to delivering these results, and recent examples of this 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 U.S. 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 CO2 emissions by 3 million kg, and generated $22 million of annual savings.
 
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Our Reportable Segments
We report our results of operations in two segments: Institutional and Food & Beverage. The following charts show our revenue breakdown for the fiscal year ended December 31, 2019 by our segments and regions:
By Segment
By Region
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Institutional Segment
Our Institutional segment generated $2.0 billion in Revenue and $275 million in Adjusted EBITDA (14.0% Adjusted EBITDA margin) for the year ended December 31, 2019 and has grown its revenue at a 4.7% CAGR from 2017 to 2019 on a constant dollar basis.
Through our Institutional segment we offer a wide range of hygiene, infection prevention and cleaning solutions. These solutions drive operational improvements and food safety for customers in the Health Care, Education, Food Service, Retail & Grocery, Hospitality, and Building Service Contractors industries. We hold a leading market position in our regional core markets and believe we held the #1 or #2 market position in North America, Europe, MEA, LATAM and APAC based on net sales for 2019.
Our Institutional segment’s revenue base is stable due to the ‘sticky’ nature of our business model. Not only do our cleaning products require periodic replacement, generating highly recurring revenue, but the application of our chemicals is also controlled by proprietary dosing and dispensing equipment installed at customer sites, which increases customer switching costs and generates operating efficiencies for our customers.
By Region
By Sector
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Our Institutional products are designed to enhance cleanliness, safety, environmental sustainability, and efficiency for our customers. We offer a broad range of products, solutions, equipment and machines including infection prevention & personal care, floor & building care chemicals, kitchen & mechanical warewash chemicals and machines, dosing & dispensing equipment, and floor care machines.
Food & Beverage Segment
Our Food & Beverage segment generated $630 million in Revenue and $95 million in Adjusted EBITDA (15.0% Adjusted EBITDA margin) for the year ended December 31, 2019 and Revenue has grown at a 5.6 % CAGR from 2017 to 2019 on a constant dollar basis.
Through our Food & Beverage segment we sell high-performance hygiene, infection prevention, and cleaning solutions for manufacturing operations. These solutions enhance food safety, operational excellence, and sustainability for customers in the Brewing, Beverage, Dairy, Processed Foods, Pharma, and Agriculture industries. We believe we held the #1 or #2 market position in North America, Europe, MEA, LATAM and APAC based on net sales for 2019.
Our Food & Beverage segment also generates consistent revenues. 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 Diversey’s 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.
By Region
By Sector
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Our Food & Beverage products are designed to maximize the hygiene, safety, and efficiency of our customer’s 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 & equipment solutions, knowledge-based services, training through our Diversey Hygiene Academy, and water treatment.
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”), which we believe we can address over the long term. 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.
We believe that the recurring demand for consumable products and services, as well as broader upward secular demand trends, have driven stable historical demand and growth of approximately 3% across our SAM. We further believe that the COVID-19 pandemic has further solidified these dynamics. 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%.
In addition, 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 APAC and LatAm regions, to 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 as heightened 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 significantly increased demand for infection prevention products, the global market for disinfectant sprays and wipes is expected to grow at approximately a 6% CAGR until 2025, 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 commercial focus on cleaning and hygiene resulting from heightened quality standards meant 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, including products and
 
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geographies, which we are well-positioned to enter. Key opportunities to expand our SAM include residential infection prevention and hygiene, UV disinfection, residual efficacy, electrostatic sprayers, food safety services and consulting, medical instrument cleaning, amongst others.
Key trends driving demand and increasing our market opportunity 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, as customers and consumers will have a much higher focus on these areas. Additionally, the high incidences of healthcare acquired infections continue to increase standards for infection prevention in the fast-growing healthcare sector.

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 regulation and corporate ESG 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 sustainable growth in the need for food, beverage, agriculture, and health care needs over time, leading to positive secular dynamics for Food & Beverage, Food Retail, and Healthcare vertical markets.
Our Competitive Strengths
We have numerous core strengths that we believe give Diversey 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 #1 or #2 position in the key markets in which we operate.

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.

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 has cleaning machines, we are able to offer fully-integrated solutions to solve our customers’ unique challenges and become deeply imbedded within our customers’ systems.

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 100% retention rate for our top 100 customers in 2019 with ~86% of our customer relationships extending beyond ten years.

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 Diversey a leader in the development of cutting-edge solutions and a sought after partner for our customers.
 
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Asset-Light Business Model with High Cash Flow Conversion.   Our business model is customer-centric and requires minimal capital expenditures, driving high FCF conversion of approximately 65%1 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 previous 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 emergence as an independent company and successful transformation after our carve-out transaction from Sealed Air. We see a well-defined path to accelerate growth in the coming years as we continue to execute. Core tenets of this strategy include:

Recovery of Institutional Market.   Approximately 70% of our Institutional business has been negatively affected by COVID-19 and is predicted to recover to normalized levels. We expect to capitalize on this recovery through:

Commercial Excellence.   We have strengthened our commercial excellence capabilities significantly since 2016, 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 position.

Expansion in Emerging Markets.   We see tangible opportunities in the fastest growing Emerging Markets to not only support the operations of our large multi-national customers in these regions, but to also support the increased demand for infection prevention in these regions as sanitation requirements catch up to western standards. We continue to invest in the infrastructure needed to support this expansion.

Focus on Global Strategic Accounts.   We are focused on expanding share of wallet with GSAs who are growing faster than other players in their respective markets and require strong capabilities to meet their sophisticated global standards.

Continuous Innovation.   Our constant innovation across chemicals, dosing and dispensing technology, and digital helps us continuously enhance our value proposition with customers.

Drive Sector Strongholds in Food & Beverage.   We have targeted local and regional customers where we have a proven track record and are well-positioned to continue to win. Our focus is on geographies and sectors where we have exceptional talent, strong local supply, and a robust service infrastructure to further increase our high relative market share.

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 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.

Continue to Gain Share in Infection Prevention.   Diversey’s hard surface and personal care infection prevention businesses have a proven history of market share gains in the healthcare sector and have grown significantly over the last six years. Following our recent Virox and Wypetech acquisitions, we expect further growth across our Infection Prevention business.

Scale Food Service.   We have invested heavily over the past few years to gain share in the Food Service market. Since 2018 we have onboarded over 15,000 new sites and established a strong sales and service infrastructure to support those sites. The infrastructure we have built now allows us to further penetrate segments of the dishwasher-based market with much greater levels of efficiency and profit.
1
Free Cash Flow defined as EBITDA + changed in net working capital – capital expenditures
 
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Cross-Sell Water Treatment.   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 existing Diversey customers.

Achieve Full Margin Potential.   Our margins have improved approximately 250 basis points since 2016 and we see significant opportunity for additional margin expansion. We have identified +$100 million of opportunities beyond 2020 for continued cost improvement, with the goal of achieving +20% margins over the long term. 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 to ensure that we are appropriately pricing all of our products across the markets we serve. With these improved processes implemented and delivering returns, we are beginning to shift focus to G&A, indirect, and supply chain cost-saving initiatives.

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 2016 and have identified a pipeline of 300+ targets to continue to drive accretive growth.
Impact of COVID-19
The COVID-19 pandemic has had a meaningful impact on our business segments. In 2Q 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 Institutional demand was offset by substantial growth in Infection Prevention, 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 year-over-year revenues declined approximately 8% in 2Q 2020, revenues in 3Q 2020 rebounded and grew 2%, 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 2020 – 2025 report by Arizton market research, the market for infection prevention products and services represented a +$6 billion global market in 2019 and is expected to grow at a compound annual growth rate of approximately 6% from 2019 to 2025. 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 out debt payment obligations, may limit our ability to plan for or respond to significant changes in our business;
 
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an active trading market for our ordinary shares may not develop;

the trading price of our ordinary shares may be volatile; and

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.
Our Sponsor
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, and venture capital and real estate, and leverages its shared platform to capture cross-asset opportunities in its strategic areas of focus. Currently, Bain Capital has a team of over 500 investment professionals supporting its various asset classes. Headquartered in Boston, Bain Capital 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, our sponsor, 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 healthcare 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 healthcare companies, including Air Medical, Beacon Health Options, Cerevel, Grupo NotreDame Intermédica, HCA, IQVIA, Physio Control, Surgery Partners, U.S. Renal Care, Waystar and Zelis.
Certain investment funds controlled by our Sponsor 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
       ordinary shares.
Option to purchase additional shares
       shares.
Ordinary shares to be outstanding after this offering
        shares (or         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 $       million, or approximately $       million if the underwriters’ option to purchase additional shares is exercised in full, assuming an initial public offering price of $       per share, which is the midpoint of the estimated price range set forth on the cover page of this prospectus, and after deducting the underwriting discount and estimated offering expenses payable by us.
The principal purposes of this offering are to increase our capitalization and financial flexibility, 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 $       million of net proceeds of this offering (or $       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, assuming an offering size as set forth in this section, affiliates of Bain Capital will own approximately     % of our ordinary shares (or     % 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        . 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
“          .”
The number of ordinary shares to be outstanding following this offering is based on          ordinary shares outstanding as of            , 2020, and excludes:

        ordinary shares issuable upon vesting and settlement of restricted shares, or performance-based shares, as of            , 2020; and

        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 in connection with the closing of this offering;
 
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no exercise of outstanding options, or issuance of shares of restricted stock units, or performance-based restricted stock units after           , 2021; and

no exercise by the underwriters of their option to purchase up to           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 and combined financial data of Diversey as of December 31, 2019 and 2018 and for the fiscal years ended December 31, 2019 and 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 condensed consolidated and combined financial statements for such years, which are included elsewhere in this prospectus. We have derived the summary historical condensed consolidated financial data of Diversey as of December 31, 2017 from our audited consolidated 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 and interim 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.
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)
2019
2018
2017
2017
Statements of Operations Data:
Net sales
$ 2,623.9 $ 2,688.1 $ 870.2 $ 1,681.3
Cost of sales
1,522.1 1570.6 518.2 959.0
Gross profit
1,101.8 1,117.5 352.0 722.3
Selling, general and administrative expenses
855.6 883.8 284.3 641.9
Transition and transformation costs
52.8 120.6 53.7
Management fee
7.5 7.5 2.4
Share-based compensation
3.0
12.3
Amortization of intangible assets
93.7 91.2 19.4 40.6
Impairment of goodwill
68.5
Restructuring costs
19.8 24.9
0.1
Merger and acquisition-related costs
0.3 7.3 38.0
Operating income (loss)
69.1 (86.3) (45.8) 27.4
Interest expense
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
11.4 2.4
Loss on settlement of foreign currency contract
121.3
Other (income) expense, net
6.0 0.8 (2.7) (0.9)
Income (loss) before income tax provision (benefit)
(76.3) (224.7) (214.6) 19.3
Income tax provision (benefit)
32.7 14.4 (61.6) 23.8
Net income (loss)
$ (109.0) $ (239.1) $ (153.0) $ (4.5)
Basic and diluted loss per share(1)
$ (1.15) $ (2.54) $ (1.63)
Basic and diluted weighted-average shares
outstanding(1)
94.40 94.00 93.70
Basic and diluted pro forma loss per share(1)(2)
$
 
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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)
2019
2018
2017
2017
Basic and diluted pro forma weighted-average
shares outstanding(1)(2)
Balance Sheet Data (as of the end of period):
Working capital
$ 29.7 $ 42.3 $ 382.4 $
Cash and cash equivalents
128.3 73.4 287.0
Property and equipment, net
172.2 206.8 190.1
Total assets
4,213.5 4,190.0 4,567.6
Total liabilities
4,534.7 4,546.9 4,611.9
Total stockholder’s equity
(321.2) (356.9) (44.3)
Other Financial Data:
EBITDA(3) $ 242.7 $ 76.9 $ (131.4) $ 116.9
Non-GAAP consolidated Adjusted EBITDA(1)
$ 339.8 $ 321.6 $ 113.8 $ 196.0
Dosing and dispensing equipment expenditures
$ (93.4) $ (83.2) $ (24.5) $ (38.5)
Capital expenditures
$ (29.0) $ (44.2) $ (4.1) $ (12.3)
(1)
See Note 24  — Earnings Per Share in the notes to our consolidated and combined 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.
 
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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 and Adjusted EBITDA:
Successor (consolidated)
Predecessor (combined)
Years Ended December 31,
For the period
March 15 –
December 31,
For the period
January 1 –
September 5
(in millions)
2019
2018
2017
2017
Income (loss) before income tax provisions (benefit)
$ (76.3) $ (224.7) $ (214.6) $ 19.3
Interest expense
141.0 135.2 42.7 9.0
Interest income
(7.5) (5.8) (1.4) (3.3)
Amortization expense of intangible assets
acquired
93.7 91.2 19.4 40.6
Depreciation expense included in cost of sales
84.4 73.4 21.5 41.1
Depreciation expense included in selling, general and
administrative expenses
7.4 7.6 1.0 10.2
EBITDA
$ 242.7 $ 76.9 $ (131.4) $ 116.9
Impairment of goodwill(1)
68.5
Transition and transformation costs and non-recurring costs(2)
52.8 120.6 63.3
Restructuring costs(3)
19.8 24.9 0.1
Foreign currency loss related to Argentina subsidiaries(4)
11.4 3.4
Loss on foreign currency forward contract(5)
121.3
Adjustment of tax indemnification asset(6)
7.1 31.0 (3.9)
Merger and acquisition-related cost(7)
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 2.4
Non-cash pension and other post-employment benefit plan(10)
(8.8) (10.5) (2.9) (5.9)
Foreign currency loss (gain)(11)
10.8 (16.3) 0.8 0.1
Factoring fees(12)
3.4 0.6
Share-based incentive compensation
3.0 12.3
Charges related to sale of Diversey(13)
23.1
Bridge commitment fees(14)
7.5
Stand-alone adjustment(15)
40.3
Gain on sale of business and investments(16)
(13.0)
Non-cash items
1.8 4.2
Other items
0.9 2.4 0.9 4.9
Non-GAAP consolidated Adjusted EBITDA
$ 339.8 $ 321.6 $ 113.8 $ 196.0
(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. Refer to Note 8 — Goodwill and Identifiable Intangible Assets in the notes to our consolidated and combined financial statements included elsewhere in this prospectus for additional information.
(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.
(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
 
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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 and combined statements of operations rather than as a component of Cumulative Translation Adjustment on our consolidated balance sheets. As a result, we recorded a loss of $11.4 million on remeasurement of the Argentinian Peso into the U.S. dollar.
(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 and combined 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 management fee paid to Bain Capital pursuant to a management agreement for management and financial advisory services and oversight provided to the Company and its subsidiaries. The management agreement will be terminated in connection with this offering.
(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 — Retirement Savings Plans and Defined Benefit Pension Plans and Note 15 — Other Post-employment Benefits and Other Employee Benefits Plans in the notes to our consolidated and combined 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 USD to the euro on our USD-denominated debt.
(12)
On November 15, 2018, Diversey entered into a Master Agreement with Factofrance, S.A. This amount represents the fees to sell certain trade receivables, without recourse, of seven Diversey companies. Refer to Note 6 to our consolidated and combined financial statements included elsewhere in this prospectus for additional information.
(13)
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.
(14)
Represents commitment fees that were expensed upon the termination of a commitment with respect to a bridge financing facility.
(15)
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.
(16)
Represents an adjustment to remove the non-cash gain on sale of the Company’s shares in the Virox joint venture. On December 17, 2019, Diversey acquired all the underlying intellectual property of Virox Holdings, Inc. and Virox International Holdings, Inc. As part of the transaction, Virox acquired Diversey’s equity shares held in the joint venture.
 
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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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Confidential Treatment requested by Diversey Holdings, Ltd.
Pursuant to 17 C.F.R. Section 200.83
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 57 countries, and our products are distributed in those countries as well as approximately 25 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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Confidential Treatment requested by Diversey Holdings, Ltd.
Pursuant to 17 C.F.R. Section 200.83

restrictive governmental actions such as those on transfer or repatriation of funds and trade protection matters, including anti-dumping duties, tariffs, embargoes 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, 2019 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 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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Confidential Treatment requested by Diversey Holdings, Ltd.
Pursuant to 17 C.F.R. Section 200.83
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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Confidential Treatment requested by Diversey Holdings, Ltd.
Pursuant to 17 C.F.R. Section 200.83
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.
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 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.
 
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Confidential Treatment requested by Diversey Holdings, Ltd.
Pursuant to 17 C.F.R. Section 200.83
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 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.
 
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Confidential Treatment requested by Diversey Holdings, Ltd.
Pursuant to 17 C.F.R. Section 200.83
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 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.
 
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Confidential Treatment requested by Diversey Holdings, Ltd.
Pursuant to 17 C.F.R. Section 200.83
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 or 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 and responding to market changes. 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 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.
 
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Confidential Treatment requested by Diversey Holdings, Ltd.
Pursuant to 17 C.F.R. Section 200.83
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 overtime. 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 an increased regulatory burden, and we expect significant future environmental compliance obligations in our operations. Increased compliance costs, increasing risks and penalties associated with violations, or our inability to market some of our products in certain jurisdictions 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 improper payments or offers of payments to non-U.S. governments and their officials for the purpose of obtaining or retaining business. We conduct business in countries and regions which are less developed and 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. 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 may result in severe criminal or civil sanctions and penalties, and we may be subject to other liabilities which could adversely effect on our business, consolidated financial condition and results of operations.
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 trademarks, 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 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
 
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Confidential Treatment requested by Diversey Holdings, Ltd.
Pursuant to 17 C.F.R. Section 200.83
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. 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. The costs required to protect our trademarks and trade names may be substantial.
We cannot be certain that we will be able to assert these 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. 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. Any failure by us to protect our 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. 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. 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.
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
 
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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 rules and regulations of the SEC and                 , 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.
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
 
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street demonstrations may adversely affect our reputation, business and consolidated financial condition, results of operations and cash flows.
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, 2019, we had $2,522.5 million of total debt outstanding and up to $129.3 million of additional borrowing capacity under our revolving credit facility. Specifically 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.
We have applied to list our ordinary shares on                 . 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                 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           months from the date of this prospectus without the prior written consent of                 and       , as representatives of the underwriters, subject to certain exceptions. However, the underwriters may release these 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,
 
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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” 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.
In addition, we may, directly or indirectly, hold equity interests in other PFICs. Whether we or any of our subsidiaries will be a PFIC in 2020 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 (or any of our subsidiaries) will not be a PFIC in 2020 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    % of our outstanding ordinary shares (or    % of our outstanding ordinary shares if the underwriters exercise in full their option to purchase additional shares). Bain Capital could 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. In cases where Bain Capital’s interests are aligned and they vote together, Bain Capital will also have the power to prevent or cause a change in control. Without the consent of some or all of these principal shareholders, we may be prevented from entering into transactions that could be beneficial to us or our minority shareholders. In addition, our directors and officers could violate their fiduciary duties by diverting business opportunities from us to themselves or others. The interests of our largest shareholders may differ from the interests of our other shareholders. The concentration in the ownership of our ordinary shares may cause a material decline in the value of our ordinary shares. For more information regarding our principal shareholders and their affiliated entities, see “Principal Shareholders.”
 
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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 Law (2020 Revision) 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 developed 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 Law 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 SEC and the listing standards of                 , 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
 
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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           million of our ordinary shares, or approximately    % of our outstanding ordinary shares (or    % 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           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.
In addition, our amended and restated memorandum and articles of association that will become effective upon or prior to the completion of this offering will contain a provision that provides Bain Capital the right to designate: (i) all of the nominees for election to our board of directors for so long as Bain Capital beneficially owns    % or more of the total number of ordinary shares then outstanding; (ii) a number of directors (rounded up to the nearest whole number) equal to    % of the total directors for so long as Bain Capital beneficially owns at least    % and less than    % of the total number of ordinary shares then outstanding; (iii) a number of directors (rounded up to the nearest whole number) equal to    % of the total directors for so long as Bain Capital beneficially owns at least    % and less than    % of the total number of ordinary shares then outstanding; (iv) two directors for so long as Bain Capital beneficially owns at least    % and less than    % of the total number of ordinary shares then outstanding; and (v) one director for so long as Bain Capital beneficially owns at least    % and less than    % of the total number of ordinary shares then outstanding. This provision will also provide that Bain Capital may assign such right to an affiliate of Bain Capital. Our amended and restated memorandum and articles of association will prohibit us from increasing or decreasing the size of our board of           directors without the prior written consent of Bain Capital for so long as it has nomination rights.
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 $      per share, representing the difference between the initial public offering price of $      per share and our pro forma net tangible book deficit per share as of                 of $      . 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
 
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Confidential Treatment requested by Diversey Holdings, Ltd.
Pursuant to 17 C.F.R. Section 200.83
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. There is no statutory recognition in the Cayman Islands of judgments obtained in the United States, although the courts of the Cayman Islands will generally recognize and enforce a non-penal judgment of a foreign court of competent jurisdiction without retrial on the merits.
 
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Confidential Treatment requested by Diversey Holdings, Ltd.
Pursuant to 17 C.F.R. Section 200.83
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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Pursuant to 17 C.F.R. Section 200.83
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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Confidential Treatment requested by Diversey Holdings, Ltd.
Pursuant to 17 C.F.R. Section 200.83
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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Pursuant to 17 C.F.R. Section 200.83
USE OF PROCEEDS
We estimate that our net proceeds from this offering will be approximately $      million (or approximately $      million if the underwriters’ option to purchase additional shares is exercised in full), assuming an initial public offering price of $      per share, which is the midpoint of the estimated price range set forth on the cover page of this prospectus, after deducting the underwriting discount and estimated offering expenses payable by us.
The principal purposes of this offering are to obtain additional capital to fund our operations and growth, 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 $      million of net proceeds of this offering (or $      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. and the remainder for general corporate purposes.
As of December 31, 2019, we had $1,944.5 million of indebtedness outstanding under our Term Loan Facility and $120.0 million outstanding under our Revolving Credit Facility. At December 31, 2019, the interest rate for the U.S. dollar term loan was 4.93%, the interest rate for the Euro term loan was 3.25% and the interest rate associated with the Revolving Credit Facility was 4.37%. See “Description of Certain Indebtedness.”
Each $1.00 increase or decrease in the assumed initial public offering price of $      per share, which is the midpoint of the estimated public offering price range set forth on the cover page of this prospectus, would increase or decrease the net proceeds to us from this offering by approximately $      million, assuming the number of shares offered, as set forth on the cover page of this prospectus, remains the same, and after deducting the underwriting discount and estimated offering expenses payable by us.
Each 1,000,000 increase or decrease in the number of shares offered would increase or decrease the net proceeds to us from this offering by approximately $      million, assuming that the assumed initial public offering price per share for the offering remains at $      , which is the midpoint of the estimated public offering price range set forth on the cover page of this prospectus, and after deducting the underwriting discount and estimated offering expenses payable by us.
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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Confidential Treatment requested by Diversey Holdings, Ltd.
Pursuant to 17 C.F.R. Section 200.83
CAPITALIZATION
The following table describes our cash and cash equivalents and capitalization as of September 30, 2020, as follows:

on an actual basis; and

on a pro forma basis, after giving effect to the sale of     ordinary shares in this offering and the application of the net proceeds from this offering as set forth under “Use of Proceeds”, assuming an initial public offering price of $      per share, which is the midpoint of the estimated price range set forth on the cover page of this prospectus, 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 September 30, 2020
Actual
Pro Forma
(in millions)
Cash and cash equivalents
$      $     
Total debt:
Senior Secured Credit Facilities:
Term Loan Facility
Revolving Credit Facility
Senior Notes
Short-term borrowings
Other
Unamortized deferred financing costs
Unamortized original issue discount
Total debt
$ $
Preferred Equity Certificates
Shareholders’ Equity:
Ordinary shares, $      par value per share, shares authorized and outstanding
$
Additional Paid-In Capital
Accumulated deficit
Accumulated other comprehensive loss
Total stockholders’ equity
$ $
A $1.00 increase or decrease in the assumed initial public offering price of $      per share, which is the midpoint of the price range set forth on the cover page of this prospectus, would increase or decrease each of cash and cash equivalents, additional paid-in capital, total stockholders’ equity and total capitalization on a pro forma basis by approximately $      million, assuming the number of shares offered, as set forth on the cover page of this prospectus, remains the same, and after deducting the underwriting discount and estimated offering expenses payable by us.
Similarly, each 1,000,000 increase or decrease in the number of ordinary shares offered in this offering would increase or decrease each of cash and cash equivalents, additional paid-in capital, total stockholders’ equity (deficit) and total capitalization on a pro forma basis by approximately $      million, based on an assumed initial public offering price of $      per share, which is the midpoint of the estimated offering
 
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price range set forth on the cover page of this prospectus, and after deducting the underwriting discount and estimated offering expenses payable by us.
Except as otherwise indicated, the above discussion and table are based on      ordinary shares outstanding as of September 30, 2020 and excludes:

      ordinary shares issuable upon the vesting and settlement of restricted shares and performance-based shares outstanding as of September 30, 2020; and

      ordinary shares reserved for future issuance under our 2021 Omnibus Incentive Equity 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 value per share of our ordinary shares immediately after this offering.
As of September 30, 2020, we had a net tangible book value of $      million, or $      per ordinary share. Net tangible book value 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”, at an assumed initial public offering price of $      per share, which is the midpoint of the price range set forth on the cover of this prospectus, our pro forma net tangible book value as of September 30, 2020 would have been $      million, or $      per ordinary share. This represents an immediate increase in net tangible book value of $      per share to our existing shareholders and an immediate dilution in net tangible book value of $      per share to investors participating in this offering at the assumed initial public offering price. The following table illustrates this per share dilution:
Assumed initial public offering price per share
$       
Historical net tangible book value per share as of September 30, 2020
$       
Increase in net tangible book value per share attributable to the investors in this offering
Pro forma net tangible book value per share after giving effect to this offering
Dilution in net tangible book value per share to the investors in this offering
$
A $1.00 increase or decrease in the assumed initial public offering price of $      per share, which is the midpoint of the estimated public offering price range set forth on the cover page of this prospectus, would increase or decrease our pro forma net tangible book value per share after this offering by $      , and would increase or decrease the dilution per share to the investors in this offering by $      , assuming that the number of shares offered by us, as set forth on the cover page of this prospectus, remains the same, and after deducting the underwriting discount and estimated offering expenses payable by us. Similarly, each increase or decrease of one million shares in the number of ordinary shares offered by us would increase or decrease our pro forma net tangible book value per share after this offering by $      and would increase or decrease dilution per share to investors in this offering by      , assuming the assumed initial public offering price, which is the midpoint of the price range set forth on the cover page of this prospectus, remains the same and after deducting the underwriting discount and estimated offering expenses payable by us.
If the underwriters exercise their option to purchase additional shares in full, the pro forma net tangible book value per share after this offering would be $      , and the dilution in pro forma net tangible book value per share to new investors in this offering would be $      .
The following table presents, on a pro forma basis as described above, as of September 30, 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 an assumed offering price of $      per share, which is the midpoint of the price range set forth on the cover page of this prospectus, before deducting the underwriting discount and estimated offering expenses payable by us.
Shares Purchased
Total Consideration
Average Price
Number
Percentage
Amount
Percentage
Per Share
Existing Shareholders
    
    
New Investors
Total
 
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A $1.00 increase or in the assumed initial public offering price of $      per share, which is the midpoint of the price range set forth on the cover page of this prospectus, would increase or decrease the total consideration paid by new investors by $      million and increase or decrease the percent of total consideration paid by new investors by    %, assuming that the number of shares offered by us, as set forth on the cover page of this prospectus, remains the same and before deducting the underwriting discount and estimated offering expenses payable by us.
Similarly, each 1,000,000 increase or decrease in the number of shares offered would increase or decrease the net proceeds to us from this offering by approximately $      million, assuming that the assumed initial public offering price per share for the offering remains at $      , which is the midpoint of the estimated public offering price range set forth on the cover page of this prospectus, and after deducting the underwriting discount and estimated offering expenses payable by us.
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    % and our new investors would own    % of the total number of ordinary shares outstanding after this offering.
In addition, to the extent we issue any additional stock options or any stock 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      ordinary shares outstanding as of September 30, 2020 and excludes:

ordinary shares issuable upon vesting and settlement of restricted shares, or performance-based shares, as of        , 2020; and

ordinary shares reserved for future issuance under the 2021 Omnibus Incentive Equity Plan.
 
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Confidential Treatment requested by Diversey Holdings, Ltd.
Pursuant to 17 C.F.R. Section 200.83
SELECTED CONDENSED CONSOLIDATED AND COMBINED HISTORICAL FINANCIAL DATA
The following tables present the selected condensed consolidated financial data of Diversey and the selected condensed combined financial data of the Predecessor Diversey Business. We have derived the selected condensed consolidated and combined financial data of Diversey as of December 31, 2019 and 2018 and for the fiscal years ended December 31, 2019 and 2018, and 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 condensed consolidated financial statements for such years, which are included elsewhere in this prospectus. We have derived the selected condensed consolidated and combined financial data as of December 31, 2017, 2016 and 2015 and for the fiscal years ended December 31, 2016 and 2015 from our audited combined financial statements of Diversey and the Predecessor Diversey Business and related notes thereto that do not appear in this prospectus. Our historical results are not necessarily indicative of the results to be expected in any future period.
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.
The information set forth below should be read together with the “Summary Condensed Consolidated and Combined Financial Data,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and the consolidated and combined financial statements and the accompanying notes included elsewhere in this prospectus.
Successor (consolidated)
Predecessor (combined)
Fiscal Years ended
December 31,
For the period
March 15 – 
December 31
For the period
January 1 – 
September 5
Fiscal Years ended
December 31,
(in millions, except per share amounts)
2019
2018
2017
2017
2016
2015
Statements of Operations Data:
Net sales
$ 2,623.9 $ 2,688.1 $ 870.2 $ 1,681.3 $ 2,568.8 $ 2,620.7
Cost of sales
1,522.1 1,570.6 518.2 959.0 1,448.2 1,492.4
Gross profit
1,101.8 1,117.5 352.0 722.3 1,120.6 1,128.3
Selling, general and administrative
855.6 883.8 284.3 641.9 939.8 968.3
Transition and transformation costs
52.8 120.6 53.7
Management fee
7.5 7.5 2.4
Share-based compensation
3.0
12.3
Amortization of intangible assets
93.7 91.2 19.4 40.6 57.3 54.6
Impairment of goodwill
68.5
Restructuring costs
19.8 24.9
0.1 10.8 29.3
Merger and acquisition-related costs
0.3 7.3 38.0
Operating income (loss)
69.1 (86.3) (45.8) 27.4 112.7 76.1
Interest expense
141.0 135.2 42.7 9.0 13.8 16.3
Loss on sale of business investment
(13.0)
Bridge commitment fees
7.5
Foreign currency loss related to Argentina subsidiaries
11.4 2.4
Foreign currency loss related to Venezuelan subsidiaries
1.7 5.9
Loss on settlement of foreign currency contract.
121.3
 
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Successor (consolidated)
Predecessor (combined)
Fiscal Years ended
December 31,
For the period
March 15 – 
December 31
For the period
January 1 – 
September 5
Fiscal Years ended
December 31,
(in millions, except per share amounts)
2019
2018
2017
2017
2016
2015
Other (income) expense, net
6.0 0.8 (2.7) (0.9) (3.6) 1.8
Loss before income tax (benefit)
(76.3) (224.7) (214.6) 19.3 100.8 52.1
Income tax provision (benefit)
32.7 14.4 (61.6) 23.8 (7.4) (33.1)
Net income (loss)
$ (109.0) $ (239.1) $ (153.0) $ (4.5) $ 108.2 $ 85.2
Basic and diluted loss per share(1)
$ (1.15) $ (2.54) $ (1.63)
Basic and diluted weighted-average shares outstanding(1)
94.40 94.00 93.70
Successor (consolidated)
Predecessor (combined)
As of December 31,
As of December 31,
(in millions)
2019
2018
2017
2016
2015
Consolidated Balance Sheet Data:
Property and equipment, net
$ 172.2 $ 206.8 $ 190.1 $ 171.3 $ 192.9
Total assets
4,213.5 4,190.0 4,567.6 3,146.6 3.330.7
Total liabilities
4,534.7 4,546.9 4,611.9 1,538.1 1,617.0
Total debt(2)
2,522.5 2,463.1
216.4 224.9
Total stockholder’s equity
(321.2) (356.9) (44.3) 1,608.5 1,713.7
(1)
See Note 24 — Earnings Per Share in the notes to our consolidated and combined financial statements included elsewhere in this prospectus for additional information with respect to our calculations of our actual basic and diluted net income (loss) per share.
(2)
Includes Senior Secured Credit Facilities, net, Senior Notes, Short-term borrowings, Other, Unamortized deferred financing costs and unamortized original issue discount. Refer to Note 10 to our consolidated and combined financial statements included elsewhere in this prospectus for additional information.
 
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MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
This management discussion and analysis (“MD&A”) provides information we believe is useful in understanding our operating results, cash flows and financial condition. We provide quantitative and qualitative information about key drivers behind revenue and earnings performance, including the impact of foreign currency, acquisitions as well as changes in volume and pricing.
The MD&A should be read together with our Consolidated and Combined Financial Statements and the related Notes thereto, which are prepared in accordance with U.S. GAAP, and set forth beginning on page F-1 of this prospectus. The statements in this discussion and analysis regarding industry outlook, our expectations regarding our future performance, liquidity and capital resources and other non-historical statements are forward-looking statements. These forward-looking statements are subject to numerous risks and uncertainties, including, but not limited to, the risks and uncertainties described in the “Risk Factors” and “Forward-Looking Statements” sections of this prospectus. Our actual results may differ materially from those contained in or implied by any forward-looking statements.
On October 1, 2020, we changed how management evaluates the business and allocates resources, moving from a geography-based segment reporting structure, to a product market-based segment reporting structure. The change reflects how our Chief Operating Decision Maker manages the business and allocates resources. For purposes of segment presentation in our historical consolidated and combined financial statements, reportable segments are still presented on a geographic basis. We intend to update our financial statement presentation under ASC 280 — Segment Reporting, during the quarter ended December 31, 2020. For the purposes of this MD&A, we have followed the legacy geographic segment structure to align with our consolidated and combined financial statements.
Business and Reportable Segments
We are a leading global provider of high performance hygiene, infection prevention, and cleaning solutions for the Institutional and Food & Beverage markets. In addition, we offer a wide range of value added services, including food safety and application training and consulting, as well as auditing of hygiene and water management. Our Institutional business provides solutions serving end-users such as healthcare facilities, food service providers, retail and grocery outlets, educational institutions, hospitality establishments, and building service contractors. Our Food & Beverage business provides solutions serving manufacturers in the brewing, beverage, dairy, processed foods, pharma, and agricultural markets. Although our cleaning products represent only a small portion of our customers’ total cleaning costs, they are typically viewed as being non-discretionary because they can have a meaningful impact on the efficacy of food safety, operational excellence, and sustainability. The COVID-19 pandemic has further reinforced the essential nature of our solutions and increased hygiene, infection prevention, and cleaning standards across all markets.
We trace our history back for over a century and have predominantly operated within larger, diversified, product driven manufacturing companies including Molson, Unilever, SC Johnson & Son, and most recently, Sealed Air. In 2017, we partnered with investment vehicles affiliated with Bain Capital to become an independent business in connection with the 2017 Acquisition.
Our business activities and operations are organized into five geographic regions that represent our reportable segments:

North America — represents our operations located within the U.S. and Canada, primarily serving customers in the healthcare, retail and food service industries.

Latin America — represents our operations located in South America, Central America and Mexico, primarily serving customers in the retail, beverage, processed food and dairy industries.

Europe — represents our operations located in Europe, primarily serving customers in the food service, building service contractor, healthcare, hospitality and processed food industries.

Middle East & Africa — represents our operations located in the Middle East and Africa, primarily serving customers in the hospitality, beverage, processed food and food service industries.
 
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Asia Pacific — represents our operations located in Asia and Australia, primarily serving customers in the hospitality, food service, beverage and building service contractor industries.
The Company evaluates performance of the reportable segments based on the results of each segment. The performance metric used by the Company’s chief operating decision maker to evaluate performance of our reportable segments is Adjusted EBITDA. Corporate/Global reflects costs that support all segments but are not allocated or monitored by segment management, and include executive and administrative functions, finance and accounting, procurement, information technology, human resources, marketing and research and development.
Recent Trends and Events
Impact of COVID-19
On March 11, 2020, the World Health Organization declared the Coronavirus Disease 2019 (“COVID-19”) outbreak as a global pandemic. Additionally, many international heads of state, including the President of the United States, declared the COVID-19 outbreak to be a national emergency in their respective countries. In response to these declarations and the rapid spread of COVID-19 across many countries, including the United States, governmental agencies around the world (including federal, state and local governments in the United States) implemented varying degrees of restrictions on social and commercial activities to promote social distancing in an effort to slow the spread of the illness. These measures, as well as future measures, have had and will continue to create a significant adverse impact upon many sectors of the global economy. Additionally, the spread of the virus continues in many parts of the world, including the United States.
We continue to monitor the impact that COVID-19 has on all aspects of our business and geographies, including the impact on our employees, customers, suppliers, business partners and distribution channels. We continually assess the evolving situation and implement business continuity plans across all operations. See the section titled “Risk Factors” within this prospectus for additional risks related to the COVID-19 pandemic.
Employee Health and Safety and Business Continuity
The health and safety of our employees, suppliers and customers continue to be our top priority. Safety measures remain in place at each of our facilities such as: enhanced cleaning procedures, employee temperature checks, use of personal protective equipment for location-dependent workers, social distancing measures within operating sites, remote work arrangements for non-location dependent employees, visitor access restrictions and limitations on travel, particularly in regions with high transmission of COVID-19.
Remote work arrangements will remain in place for some of our non-location dependent employees as appropriate. In a remote working environment, we continue our efforts to mitigate information technology risks including failures in the physical infrastructure or operating systems that support our businesses and customers, or cyber attacks and security breaches of our networks or systems.
While we continue to practice enhanced employee safety and other precautionary measures during this pandemic, there are significant uncertainties regarding the future impact of COVID-19, which we cannot predict.
Supply Chain and Operations
Diversey’s global operations have continued to operate and serve the needs of our customers through the global pandemic. We have seen little to no facility closures due to government orders. While we have introduced social distancing, health monitoring and any necessary quarantining into our global operations, this work has been done with very limited impact to overall production capacity. 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. We will continue to monitor these situations globally and respond accordingly as necessary.
 
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Confidential Treatment requested by Diversey Holdings, Ltd.
Pursuant to 17 C.F.R. Section 200.83
We cannot predict the impact on our operations of future spread or worsening of the COVID-19 pandemic or future restrictions on commercial activities by governmental agencies to limit the spread of the virus. The health of our workforce, and our ability to meet staffing needs in our manufacturing facilities, distribution of our products and other critical functions are key to our operations. See the “Risk Factors” section of this prospectus for more information regarding risks related to COVID-19.
Markets We Serve
Early during the implementation of initial commercial and social restrictions, workers supporting the production of home cleaning, pest control, and other essential products necessary to clean, disinfect, sanitize, and ensure the cleanliness of residential homes, shelters, and commercial facilities, including their respective supply chains, were deemed “Essential Critical Infrastructure Workers” by the U.S. Department of Homeland Security and similarly by other international governmental agencies. These designations covered Diversey employees and allowed us to continue operations in order to serve our customers.
Late in the first quarter 2020 and early in the second quarter 2020, as the initial impact of COVID-19 intensified around the world, we experienced an increase in demand for infection prevention product ranges, specifically disinfectants, sanitizers and hand care. The increased demand for infection prevention solutions has continued through the third quarter of 2020. Conversely, 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.
Liquidity and Financial Position
In March 2020, we completed a sale-leaseback transaction, which provided $22.9 million in net proceeds. In April 2020, we entered into a receivables securitization agreement, which provided $50 million for sold receivables. In June 2020, we closed on a $150.0 million loan commitment (“New Tem Loan”) in connection with our Senior Secured Credit Facilities for net proceeds of $144.5 million. The proceeds from the New Term Loan were used to pay down $133.0 million of our Revolving Credit Facility, under which approximately $240.0 million of undrawn capacity remained available as of September 30, 2020. In July 2020, we acquired 100% of the stock and associated real estate of Wypetech, LLC for $34.1 million.
The Company does not have long-term debt maturing until September 2024. Our Senior Secured Credit Facilities contain customary affirmative and negative covenants for credit facilities of this type, including limitations on our indebtedness, liens, investments, restricted payments, mergers and acquisitions, dispositions of assets, transactions with affiliates, amendment of documents and sale-leaseback transactions, and a covenant specifying a maximum leverage ratio. We are currently compliant with all debt covenants and expect continued compliance with our debt covenants including the covenant leverage ratio over the next 12 months. The Revolving Credit Facility has a maturity date of September 6, 2022. Our Senior Notes also contain certain negative covenants. See “Description of Certain Indebtedness” and Note 10 — Debt and Credit Facilities to our Consolidated and Combined Financial Statements for further details.
Other Factors Affecting Our Operating Results
Our operating results have been, and will likely continue to be, affected by numerous factors, including the increasing worldwide demand for our products and services, increasing regulatory compliance costs, macroeconomic and political conditions, the introduction of new and upgraded products, recent acquisitions and foreign currency exchange rates. Each of these factors is briefly discussed below.
 
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Confidential Treatment requested by Diversey Holdings, Ltd.
Pursuant to 17 C.F.R. Section 200.83
Increasing Demand for Our Products and Services
Governmental regulations for food safety, disease control and consumer focus on hygiene and cleanliness have both increased significantly across the world in recent years. Climate change, water scarcity and environmental concerns have combined to create further demand for products, services and solutions designed to minimize waste and support broader sustainability. In addition, many of our customers require tailored cleaning solutions that can assist in reducing labor, energy, water-use and the costs related to cleaning, sanitation and hygiene activities. We help our customers realize efficiencies throughout the operation of their facilities by developing customized solutions. We believe that our value-added customer service approach and proven commitment to providing cost-savings and sustainable solutions position us well to address these and other critical demand drivers in order to drive revenue growth.
Increasing Regulatory Compliance Costs
Although our industry has always been highly regulated, it is becoming more regulated with the introduction of, among other things, the Biocidal Product Regulation and the Globally Harmonized System of Classification and Labelling of Chemicals. Compliance costs associated with these new regulations have impacted our cost of doing business and we expect these regulations and other existing and new regulations to continue to affect our cost of doing business in the future.
Impact of Inflation and Currency Fluctuations
We have significant international operations with approximately 81% of our net sales for the year ended December 31, 2019 being generated from sales to customers located outside of the U.S. The percentage of our sales to international customers has generally increased in recent periods as we continue to penetrate new markets and geographies and diversify our current revenue base.
We present our consolidated financial statements in U.S. dollars. As a result, we must translate the assets, liabilities, revenues and expenses of all of our operations into U.S. dollars at applicable exchange rates. Consequently, increases or decreases in the value of the U.S. dollar may affect the value of these items with respect to our non-U.S. dollar businesses in our combined financial statements, even if their value has not changed in their local currency. For example, a stronger U.S. dollar will reduce the relative value of reported results of non-U.S. dollar operations, and, conversely, a weaker U.S. dollar will increase the relative value of the non-U.S. dollar operations. These translations could significantly affect the comparability of our results between financial periods and/or result in significant changes to the carrying value of our assets, liabilities and stockholders’ equity.
In addition, many of our operations buy materials and incur expenses in a currency other than their functional currency. As a result, our results of operations are impacted by currency exchange rate fluctuations because we are generally unable to match revenues received in foreign currencies with expenses incurred in the same currency. From time to time, as and when we determine it is appropriate and advisable to do so, we may seek to mitigate the effect of exchange rate fluctuations through the use of derivative financial instruments.
Argentina
Economic and political events in Argentina have continued to expose us to heightened levels of foreign currency exchange risk. Accordingly, Argentina has been designated a highly inflationary economy under U.S. GAAP effective July 1, 2018, and the U.S. dollar replaced the peso as the functional currency for our subsidiaries in Argentina. Refer to “Impact of Inflation and Currency Fluctuations” within Note 3 — Summary of Significant Accounting Policies to our Consolidated and Combined Financial Statements for additional details, and “— Foreign currency loss related to Argentina subsidiaries”.
Presentation of Financial Information
Constellation is a holding company with no business operations or assets other than cash, the capital stock of its direct and indirect subsidiaries, including those comprising the Diversey Business, and
 
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Confidential Treatment requested by Diversey Holdings, Ltd.
Pursuant to 17 C.F.R. Section 200.83
intercompany loan receivables. Diamond (BC) B.V., a wholly owned subsidiary of Constellation is the Borrower under the Senior Secured Credit Facilities and the issuer of the Senior Notes.
Constellation’s global operations are conducted by its indirect wholly owned subsidiaries.
Financial information for Diversey Holdings, Ltd. has not been provided, as Diversey Holdings, Ltd. is a newly incorporated entity and has had no business transactions or other activities to date and no assets or liabilities during the periods presented in this MD&A.
Results of Operations
The following table was derived from our Consolidated Statements of Operations for the years ended December 31, 2019 and 2018, the Successor period from March 15, 2017 through December 31, 2017 and the Combined Statement of Operations for the Predecessor period from January 1, 2017 through September 5, 2017, included elsewhere in this prospectus.
(in millions, except per share amounts)
Year Ended
December 31,
2019
Year Ended
December 31,
2018
Aggregated
Year Ended
December 31,
2017
(Non-GAAP)
Successor – 
March 15,
2017 through
December 31,
2017
Predecessor  – 
January 1,
2017 through
September 5,
2017
Net sales
$ 2,623.9 $ 2,688.1 $ 2,551.5 $ 870.2 $ 1,681.3
Cost of sales
1,522.1 1,570.6 1,477.2 518.2 959.0
Gross profit
1,101.8 1,117.5 1,074.3 352.0 722.3
Selling, general and administrative
expenses
855.6 883.8 926.2 284.3 641.9
Transition and transformation costs
52.8 120.6 53.7 53.7
Management fee
7.5 7.5 2.4 2.4
Share-based compensation
3.0 12.3 12.3
Amortization of intangible assets
93.7 91.2 60.0 19.4 40.6
Impairment of goodwill
68.5
Restructuring costs
19.8 24.9 0.1 0.1
Merger and acquisition-related costs
0.3 7.3