By Greg Roumeliotis and Soyoung Kim
NEW YORK Feb 6 Carlyle Group LP said it
has agreed to buy Illinois Tool Works Inc's industrial
packaging unit for $3.2 billion, the private equity firm's
latest acquisition of a large unit being carved out of
The sale puts the Glenview, Illinois-based company well on
its way to meeting its stated goal of divesting a quarter of its
businesses in terms of revenue. Over the next few years, this
will allow the company to focus on higher-margin businesses.
Carlyle, which has a long track record of acquiring non-core
businesses from companies and turning them around, prevailed
over a rival bidder -- the consortium of Onex Corp and
Canada Pension Plan Investment Board (CPPIB) -- in the final
stretch of the auction, Reuters reported earlier on Thursday.
While Illinois Tool Works did not formally grant exclusivity
to any of the bidders, it focused on negotiating final deal
terms with Carlyle in the last two days, according to people
familiar with the matter.
Carlyle said it has secured committed debt financing from
JPMorgan Chase & Co, Goldman Sachs Group, Bank of
America Merrill Lynch, Barclays, Citigroup
and Credit Suisse Group.
Illinois Tool Works announced in September it was initiating
a process to sell the industrial packaging unit, as the
conglomerate continues to streamline its diversified business
The packaging business makes steel, plastic and paper
products used for bundling, shipping and protecting transported
goods, with brands including Signode, Strapex, Angleboard and
The deal values the packaging business at around 8.5 times
the unit's estimated 2014 earnings before interest, tax,
depreciation and amortization, according to one person familiar
with the transaction.
Seeking to avoid frothy auctions for companies as markets
rallied, private equity firms have shown a strong appetite for
large units being carved out of companies seeking to exit
Those deals involve the creation of new companies and are
complex. Firms with experience in executing corporate carve-outs
feel they have an edge in such situations.
Last month, Carlyle said it would acquire a clinical
diagnostics unit from Johnson & Johnson for $4.15
This followed Carlyle's acquisition in February 2013 of
DuPont's performance coatings business for $4.9 billion, and its
$3.46 billion acquisition of United Technologies Corp's
Hamilton Sundstrand industrial unit in 2012, along with buyout
firm BC Partners Ltd.
Kirkland & Ellis is legal advisor to Carlyle, while Latham &
Watkins advised Illinois Tool Works on the transaction.