ITW To Sell Decorative Surfaces Segment for $1.05 Billion

Wilsonart GLENVIEW, IL— Illinois Tool Works Inc. announced plans to sell a majority of its Decorative Surfaces segment to Clayton, Dubilier & Rice LLC. According to the definitive agreement, ITW will receive approximately $1.05 billion in cash, derived from a $395 million CD&R equity investment and borrowing by the new company.

The definitive agreement, announced Aug. 16, also leaves ITW with a 49 percent equity interest in the new business, which will operate as Wilsonart International Holdings LLC. ITW acquired the Wilsonart, Resopal and Arborite brands in 1999. The company stated the Decorative Surfaces segment accounted for $1.1 billion of ITW's $17.8 billion total revenues in 2011.

The transaction is expected to be finalized in the fourth quarter of 2012. According to the release, Paul Pressler, CD&R operating partner, will assume the role of Wilsonart interim CEO.

ITW said in a statement it plans to use "a majority of the after-tax transaction proceeds to repurchase shares to help offset associated earnings dilution."

“The Decorative Surfaces segment has a variety of premium brands and is a valuable asset. The transaction with CD&R creates an opportunity for the business to fully leverage the depth and breadth of its decorative surfacing products and technologies as well as their unique design and full-service capabilities,” ITW Chairman and CEO David B. Speer said in a statement. “For ITW, the transaction will allow us to focus more resources on our core platforms as well as retain a share in the value of the business as global construction end markets improve over the coming years.”

“We believe this transaction creates a very strong foundation for Wilsonart to deliver continued industry-leading performance and are pleased to have ITW as our partner as we work with the Wilsonart management team to further build the value of the business,” CD&R Partner Nathan K. Sleeper said in a statement.