Sealed Air Corp., the maker of Bubble Wrap, agreed yesterday to pay $732.8 million in stock and cash to settle asbestos and bankruptcy-fraud claims connected with its 1998 purchase of W.R. Grace & Co.'s food-packaging unit.

Sealed Air shares surged 56 percent on news of the settlement, which includes a payment to W.R. Grace creditors of $512.5 million in cash plus interest and 9 million Sealed Air shares. The accord came hours after Fresenius Medical Care A.G. agreed to pay $15 million to settle similar bankruptcy-fraud claims over the acquisition of another Grace unit.

W.R. Grace creditors and asbestos-injury claimants have sought to prove that the chemical maker fraudulently transferred assets just before filing for Chapter 11 protection in 2001.

Columbia-based Grace is among a dozen companies that have sought refuge in bankruptcy since 2000 following a wave of asbestos suits.

"We believe that reaching this timely and manageable settlement is in the best interests of our shareholders and our business," Sealed Air President and Chief Executive Officer William V. Hickey said in a statement.

Shares of Saddle Brook, N.J.-based Sealed Air rose $13.72, or 56 percent, to $38.20 on the New York Stock Exchange yesterday. The settlement value is based on Sealed Air's Wednesday closing stock price of $24.48. The shares recovered the losses that followed a court decision on July 30 that Sealed Air would have to face the asbestos-related claims.

The settlement payment is "well below our expectation and is positive," Salomon Smith Barney analyst George Staphos wrote in a note to clients that followed the settlement announcement.

Staphos, who said he's reviewing his per-share estimates, said he sees a price target of $40, up from $22, assuming the company issues debt to pay the $513 million cash portion of the settlement.

A trial on the fraudulent-transfer claims had been scheduled for Dec. 9 in federal court in Newark.

Creditors argued in the suit that Grace had undervalued its Cryovac food-packaging unit when Sealed Air bought it for $6.2 billion in March 1998.

They alleged that Grace sought to shield itself from asbestos claims by selling the unit, which provides about 60 percent of Sealed Air's revenue.

The settlement agreement calls for Sealed Air to make the cash payment when Grace emerges from bankruptcy protection. The payment includes interest at a rate of 5.5 percent starting Dec. 21 and ending on the day Grace's reorganization plan takes effect.

The agreement also calls for the transfer to a trust set up to handle asbestos claims involving the Cryovac unit that Sealed Air may have assumed, according to the release.

Companies facing asbestos liability frequently set up such trusts, like the one Johns Manville Corp. created in 1982, to wipe out future claims.

Sealed Air won't seek indemnity from Grace for payments made under the agreement, the statement said.

The settlement also provides for protection for Sealed Air against claims by Fresenius Medical Care AG related to the purchase of a Grace unit last year, the company said. Sealed Air had $3.07 billion in sales last year.