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By Greg Roumeliotis and Soyoung Kim
NEW YORK, Feb 6 (Reuters) - Carlyle Group LP said ithas agreed to buy Illinois Tool Works Inc's industrialpackaging unit for $3.2 billion, the private equity firm'slatest acquisition of a large unit being carved out ofconglomerates.
The sale puts the Glenview, Illinois-based company well onits way to meeting its stated goal of divesting a quarter of itsbusinesses in terms of revenue. Over the next few years, thiswill allow the company to focus on higher-margin businesses.
Carlyle, which has a long track record of acquiring non-corebusinesses from companies and turning them around, prevailedover a rival bidder -- the consortium of Onex Corp andCanada Pension Plan Investment Board (CPPIB) -- in the finalstretch of the auction, Reuters reported earlier on Thursday.
While Illinois Tool Works did not formally grant exclusivityto any of the bidders, it focused on negotiating final dealterms with Carlyle in the last two days, according to peoplefamiliar with the matter.
Carlyle said it has secured committed debt financing fromJPMorgan Chase & Co, Goldman Sachs Group, Bank ofAmerica Merrill Lynch, Barclays, Citigroup and Credit Suisse Group.
Illinois Tool Works announced in September it was initiatinga process to sell the industrial packaging unit, as theconglomerate continues to streamline its diversified businesslines.
The packaging business makes steel, plastic and paperproducts used for bundling, shipping and protecting transportedgoods, with brands including Signode, Strapex, Angleboard andMima.
The deal values the packaging business at around 8.5 timesthe unit's estimated 2014 earnings before interest, tax,depreciation and amortization, according to one person familiarwith the transaction.
Seeking to avoid frothy auctions for companies as marketsrallied, private equity firms have shown a strong appetite forlarge units being carved out of companies seeking to exitnon-core businesses.
Those deals involve the creation of new companies and arecomplex. Firms with experience in executing corporate carve-outsfeel they have an edge in such situations.
Last month, Carlyle said it would acquire a clinicaldiagnostics unit from Johnson & Johnson for $4.15billion.
This followed Carlyle's acquisition in February 2013 ofDuPont'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 buyoutfirm BC Partners Ltd.
Kirkland & Ellis is legal advisor to Carlyle, while Latham &Watkins advised Illinois Tool Works on the transaction.
