UPDATE 3-Carlyle to buy Illinois Tool Works unit for $3.2 billion

Thu Feb 6, 2014 6:21pm EST
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By Greg Roumeliotis and Soyoung Kim

NEW YORK Feb 6 (Reuters) - 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 conglomerates.

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 lines.

The packaging business makes steel, plastic and paper products used for bundling, shipping and protecting transported goods, with brands including Signode, Strapex, Angleboard and Mima.   Continued...