UPDATE 2-Carlyle to buy Illinois Tool Works unit for $3.2 billion
NEW YORK, Feb 6 (Reuters) - Carlyle Group LP has agreed to buy Illinois Tool Works Inc's industrial packaging unit for $3.2 billion, the private equity firm's latest acquisition of a large unit being carved out of conglomerates.
Carlyle, which has a long track record of acquiring non-core businesses from companies and turning them around, prevailed over rival bidder -- the consortium of Onex Corp and Canada Pension Plan Investment Board (CPPIB) -- in the final stretch of the auction, Reuters reported earlier on Thursday.
Carlyle said it has secured committed debt financing from JPMorgan Chase & Co, Goldman Sachs Group, Bank of America Merrill Lynch, Barclays, Citigroup and Credit Suisse Group.
Illinois Tool Works announced in September it was initiating a process to sell the industrial packaging unit, as the conglomerate continues to streamline its diversified business lines.
The packaging business makes steel, plastic and paper products used for bundling, shipping and protecting transported goods, with brands including Signode, Strapex, Angleboard and Mima.
Seeking to avoid frothy auctions for companies as markets rallied, private equity firms have shown a strong appetite for large units being carved out of companies seeking to exit non-core businesses.
Those deals involve the creation of new companies and are complex. Firms with experience in executing corporate carve-outs feel they have an edge in such situations.
Last month, Carlyle said it would acquire a clinical diagnostics unit from Johnson & Johnson for $4.15 billion.
This followed Carlyle's acquisition in February 2013 of DuPont'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 buyout firm BC Partners Ltd.
Kirkland & Ellis is legal advisor to Carlyle.