ITW Board of Directors Authorizes Plan to Commence a Sale Process for the Industrial Packaging Segment

- Industrial Packaging Segment to Move to Discontinued Operations in 2013 Third Quarter

- Company Intends to Repurchase Approximately 50 Million Shares Between Now and No Later Than the End of 2014 to Fully Offset Industrial Packaging EPS Dilution

- Company Revises EPS Forecast for 2013 Third Quarter and Full Year

Sep 24, 2013, 09:00 ET from Illinois Tool Works Inc.

GLENVIEW, Ill., Sept. 24, 2013 /PRNewswire/ -- Illinois Tool Works Inc. (NYSE: ITW) today announced that its board of directors has authorized a plan to commence a sale process for its Industrial Packaging segment. The Company announced in February of this year that it was reviewing strategic alternatives for the segment, which had revenues of approximately $2.4 billion in 2012. As part of today's announcement, the Company said that it plans to reclassify the Industrial Packaging segment's businesses to discontinued operations in the third quarter of 2013. The Company expects the sale process to conclude by mid-2014.

"After carefully considering the underlying value of the business, the level of preliminary interest from potential buyers and a favorable debt market, the Company and our board of directors have opted to initiate a sale process for the Industrial Packaging segment," said E. Scott Santi, president and chief executive officer. "With this move, we are taking a sizeable step in the implementation of our strategy to narrow the focus of our portfolio."

To assist the company in the sale process, ITW has retained J.P. Morgan Securities LLC and Goldman, Sachs & Co. as its financial advisers.

As to the impact of this divestiture on the Company's earnings per share and capital structure going forward, ITW intends to utilize its existing share repurchase authorization to offset the full amount of divestiture-related EPS dilution through a combination of sale proceeds, free operating cash flow and additional leverage. As a result, the Company expects to repurchase approximately 50 million shares through a program that will begin immediately and conclude no later than the end of 2014.

"We believe that all of the above actions are in the best long-term interest of the Company and our shareholders," said Mr. Santi.

The following EPS forecast table for third quarter and full-year 2013 reflects the EPS impact of Industrial Packaging moving to discontinued operations. Separate from Industrial Packaging, the Company also expects to incur a $40 million discrete tax charge in the third quarter related to foreign earnings.

2013 EPS Forecast 


  Full Year

July 2013 Prior Guidance

$1.06 - $1.16

$4.10 - $4.30

Industrial Packaging discontinued operations

$0.13 - $0.15

$0.51 - $0.55

Discrete tax charge related to foreign earnings



September 2013 Guidance

$0.84 - $0.92

$3.50 - $3.66

The Industrial Packaging segment is a worldwide leader in the design and manufacturing of strap, stretch and protective consumables, tools and equipment.  Its products are used to bundle, ship and protect goods during manufacturing, transport and warehousing. The segment includes an array of well-known brands such as Signode, Strapex, Orgapack, Angleboard and Mima among others.

This release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including, without limitation, statements regarding the Company's 2013 earnings forecasts, amount and timing of share repurchases and timing of the disposition of the Industrial Packaging segment. These statements are subject to certain risks, uncertainties and other factors that could cause actual results to differ materially from those anticipated. Important factors that could cause actual results to differ materially from the Company's expectations are set forth in ITW's Form 10-K for 2012.

ITW is a Fortune 200 global diversified industrial manufacturer of value added consumables and specialty equipment with related service businesses. The Company focuses on solid growth and strong returns across its worldwide platforms and businesses. These businesses serve local customers and markets around the globe, with a significant presence in developed as well as emerging markets. ITW's adjusted revenues totaled $16.3 billion in 2012, with more than half of the revenues generated outside of the United States.

SOURCE Illinois Tool Works Inc.