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* Expects review process to last through rest of 2013
* Below-average profitability made packaging a candidate - analyst
By Bijoy Anandoth Koyitty
Feb 19 (Reuters) - Illinois Tool Works Inc said it is exploring a sale or spinoff of its industrial packaging business as its looks to improve growth by shedding less profitable units.
The industrial packaging unit, which accounted for 13 percent of the company's total revenue of $17.92 billion in 2012, makes steel, plastic and paper products used for bundling, shipping and protecting transported goods.
Longbow Research analyst Eli Lustgarten said below-average-profitability made the packaging business "a candidate to be re-examined."
"Its profitability has been in the 10-12 percent range in recent years for a company whose overall operating margin is more than 15 percent," Lustgarten said.
ITW expects the strategic review process to last through the remainder of 2013.
Glenview, Illinois-based ITW makes a variety of items, including restaurant equipment, construction products, electronic components and auto parts.
"ITW is under a five-year plan trying to help restructure the company to enhance its growth rate and improve its profitability," Lustgarten said.
The company sold a majority stake in its decorative surfaces unit to a fund managed by private equity firm Clayton, Dubilier & Rice for about $1.05 billion in August.
ITW said in January it expects to spend $120 million to $140 million for restructuring activities in 2013.
The company has retained J.P. Morgan Securities and Goldman Sachs as financial advisers.
ITW shares rose more than 2 percent to $64.65 in early trade on the New York Stock Exchange on Tuesday. They have gained 7 percent since the company sold a majority stake in its decorative surfaces unit.