Illinois Tool Works (ITW) to Sell Majority Stake in Decorative Surfaces Unit for $1.05B
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Price: $71.16 +0.23%
Overall Analyst Rating:
NEUTRAL (
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Dividend Yield: 2.1%
EPS Growth %: -1.0%
Overall Analyst Rating:
NEUTRAL (
Down)Dividend Yield: 2.1%
EPS Growth %: -1.0%
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Illinois Tool Works Inc. (NYSE: ITW) today announced it has entered into a definitive agreement to divest a 51 percent stake in its Decorative Surfaces segment, consisting of Wilsonart and related international businesses, to a fund managed by Clayton, Dubilier & Rice, LLC (CD&R). Through a combination of CD&R's equity investment of $395 million and borrowing by the new company, ITW will receive cash proceeds of approximately $1.05 billion at closing and will retain a 49 percent equity interest in the business. ITW intends to utilize a majority of after-tax transaction proceeds to repurchase shares to help offset associated earnings dilution.
The Wilsonart, Resopal and Arborite brands were acquired in 1999 by ITW as part of the Premark International transaction. In 2011, the Decorative Surfaces segment had revenues of $1.1 billion and operating margins of 12 percent. Located in North America, Europe and Asia, the Decorative Surfaces segment manufactures and distributes a variety of laminate and work surface products for the construction market including commercial, residential and renovation applications. Products include decorative laminate, solid surface, adhesives and custom edging. The business will become a new, independent company operating as Wilsonart International Holdings, LLC (Wilsonart).
The transaction is expected to be completed in the fourth quarter of 2012, and will be subject to regulatory reviews. The Decorative Surfaces segment results will continue to be reported in ITW's operating income for the third quarter of 2012. Based on the expected completion date, the company is maintaining its third quarter 2012 income per share from continuing operations guidance range of $1.03 to $1.11. Upon completion of the transaction, ITW's ownership interest in the decorative surfaces businesses will be reported using the equity method of accounting and ITW will adjust its full-year forecast accordingly.
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The Wilsonart, Resopal and Arborite brands were acquired in 1999 by ITW as part of the Premark International transaction. In 2011, the Decorative Surfaces segment had revenues of $1.1 billion and operating margins of 12 percent. Located in North America, Europe and Asia, the Decorative Surfaces segment manufactures and distributes a variety of laminate and work surface products for the construction market including commercial, residential and renovation applications. Products include decorative laminate, solid surface, adhesives and custom edging. The business will become a new, independent company operating as Wilsonart International Holdings, LLC (Wilsonart).
The transaction is expected to be completed in the fourth quarter of 2012, and will be subject to regulatory reviews. The Decorative Surfaces segment results will continue to be reported in ITW's operating income for the third quarter of 2012. Based on the expected completion date, the company is maintaining its third quarter 2012 income per share from continuing operations guidance range of $1.03 to $1.11. Upon completion of the transaction, ITW's ownership interest in the decorative surfaces businesses will be reported using the equity method of accounting and ITW will adjust its full-year forecast accordingly.
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