GLENVIEW, Ill. (AP) -- Illinois Tool Works Inc. said Thursday that it will sell a 51 percent stake in its decorative surfaces segment to a private equity firm for about $1.05 billion.
As part of the agreement, Clayton, Dubilier & Rice LLC will make an equity investment of $395 million and the new company will borrow additional funds. The deal includes Illinois Tool's Wilsonart brand and related international businesses that manufacture and distribute a variety of laminate and work surface products for the construction market.
The Glenview, Ill.-based tool maker will retain a 49 percent stake in the business and plans to use most of the proceeds to buy back shares of its stock and help offset related earnings dilution.
Illinois Tool bought the Wilsonart, Resopal and Arborite brands in 1999. Last year, the decorative surfaces business posted $1.1 billion in revenue. Its products include decorative laminate, solid surface, adhesives and custom edging.
Illinois Tool said the business will become a new, independent company operating as Wilsonart International Holdings LLC. Paul Pressler, an operating partner at Clayton, Dubilier & Rice, will be its interim CEO.
The deal is expected to close in the fourth quarter. Based on the expected closing date, Illinois Tool backed its third-quarter profit prediction of $1.03 to $1.11 per share. Analysts polled by FactSet expect $1.06 per share.
Illinois Tool shares rose $1.02 to $58.62 in morning trading. Earlier in the session they hit a new 52-week high of $58.71.