W.R. Grace agreed to spin off its specialty chemicals business and combine its packaging business with Sealed Air Corp.'s, in a transaction valued at $5 billion. Specialty chemicals company Grace will receive $1.9 billion in Sealed Air common stock based on Wednesday's closing share price of $47.63, $1.8 billion in convertible preferred shares and $1.2 billion in cash. Before combining the packaging business, Boca Raton, Fla.-based Grace will spin off its specialty chemicals business to shareholders. The new company will consist of Grace Davison, Grace Construction and Darex Container products. The new company will retain the Grace name and is expected to have annual sales of about $1.5 billion. The packaging business will pay Grace $1.2 billion in cash before the spinoff. Grace said it will use the cash to pay down its debt substantially. The transaction is expected to close in early 1998. The new packaging company will be called Sealed Air. Grace shares rose $3 to close at $69.50 on the NYSE.