The transaction comes one year after the seller began evaluating options for the unit.
Glenview, Ill.-based Illinois Tool Works, a producer of engineered fasteners and components, said in February 2013 that it had begun exploring strategic alternatives for the industrial packaging unit. In September, the company's board began a process to sell the unit, which it had expected to conclude by mid-2014.
Illinois tool Works said it engaged JPMorgan Securities LLC and Goldman, Sachs & Co. to advise on a sale of the segment, which includes the Signode, Strapex, Angleboard and Mima brands, among others, and had 2012 revenues of about $2.4 billion.
This sale is part of an ongoing restructuring process at Illinois Tool Works which is planning to consolidate its portfolio of some 800 units down to about 90.
Proceeds from the sale will be used to partially fund the seller's plan to repurchase about 50 million shares by the end of 2014 in order to offset the earnings-per-share dilution associated with this divestiture. As of the end of 2013, the company had repurchased some 14 million shares in conjunction with this plan.
Illinois Tool Works also expects to sell the construction distribution and specialty coatings businesses this year.
The company has been busy making divestitures. It already sold its consumer packaging business in the third quarter of 2012, resulting in a $27 million pre-tax gain.