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ITW To Divest A Majority Interest In Decorative Surfaces Segment To Clayton, Dubilier & Rice

GLENVIEW, Ill., Aug. 16, 2012 /PRNewswire/ -- Illinois Tool Works Inc. (NYSE: ITW) today announced it has entered into a definitive agreement to divest a 51 percent stake in its Decorative Surfaces segment, consisting of Wilsonart and related international businesses, to a fund managed by Clayton, Dubilier & Rice, LLC (CD&R).  Through a combination of CD&R's equity investment of $395 million and borrowing by the new company, ITW will receive cash proceeds of approximately $1.05 billion at closing and will retain a 49 percent equity interest in the business. ITW intends to utilize a majority of after-tax transaction proceeds to repurchase shares to help offset associated earnings dilution.

The Wilsonart, Resopal and Arborite brands were acquired in 1999 by ITW as part of the Premark International transaction. In 2011, the Decorative Surfaces segment had revenues of $1.1 billion and operating margins of 12 percent. Located in North America, Europe and Asia, the Decorative Surfaces segment manufactures and distributes a variety of laminate and work surface products for the construction market including commercial, residential and renovation applications. Products include decorative laminate, solid surface, adhesives and custom edging. The business will become a new, independent company operating as Wilsonart International Holdings, LLC (Wilsonart).

"The Decorative Surfaces segment has a variety of premium brands and is a valuable asset. The transaction with CD&R creates an opportunity for the business to fully leverage the depth and breadth of its decorative surfacing products and technologies as well as their unique design and full-service capabilities," said David B. Speer, chairman and chief executive officer. "For ITW, the transaction will allow us to focus more resources on our core platforms as well as retain a share in the value of the business as global construction end markets improve over the coming years."

"We believe this transaction creates a very strong foundation for Wilsonart to deliver continued industry-leading performance and are pleased to have ITW as our partner as we work with the Wilsonart management team to further build the value of the business," said CD&R Partner Nathan K. Sleeper.

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