By Sneha Shankar - The Carlyle Group (NASDAQ:CG) has agreed to buy the industrial packaging unit of Illinois Tool Works (NYSE:ITW) for $3.2 billion, the companies said Thursday. The sale is a result of ITW’s decision in September to shed its Industrial Packaging Unit,or IPG, to focus on core businesses.
The Washington-based Carlyle Group has a long record of acquiring non-core companies from conglomerates and turning them around into profitable ventures. In the auction held for ITW’s packaging unit, Carlyle prevailed over a Canadian consortium of Onex Corp (TSE:OCX) and Canada Pension Plan Investment Board. The money from the sale will be used to finance ITW’s share repurchase program of 50 million shares by the end of 2014. The transaction was assisted by J.P. Morgan Securities LLC (NYSE:JPM) and Goldman Sachs & Co. (NYSE:GS), ITW said in a statement.
“The Industrial Packaging business is an industry leader with a strong management team and highly dedicated people. We thank them all for their many contributions to ITW and know they will continue to thrive as an investment of the Carlyle Group,” said Scott Santi, ITW’s chief executive.
ITW, headquartered in Glenview, Ill., manufactures specialized industrial equipment and consumables with operations focused on the automotive and construction sectors in 58 countries. IPG, the packaging unit, serves the shipping and transportation industries and has 88 manufacturing locations serving 45 countries.
“IPG is a highly diversified business with strong management, attractive market positions and excellent free cash flow. We will leverage Carlyle’s global network to support the Company’s growth, and we look forward to helping IPG achieve its full potential as it transitions to a standalone company,” said Brian Bernasek, managing director of The Carlyle Group, in a statement.