US industrial firm Illinois Tool Works (ITW) has signed a definitive agreement to sell its Industrial Packaging segment to private equity investor Carlyle Group for US$3.2 billion. The transaction is subject to regulatory approval and customary closing conditions and is expected to close by mid-year.

"We are pleased to announce the sale of the Industrial Packaging segment as this represents the last major step in refocusing our portfolio in conjunction with our Enterprise Strategy," said Scott Santi, ITW President/CEO. "The Industrial Packaging business is an industry leader with a strong management team and highly dedicated people. We thank them all for their many contributions to ITW and know they will continue to thrive as an investment of The Carlyle Group.” The packaging assets to be sold include strap, stretch and protective consumables, tools and equipment used to bundle, ship and protect goods. Those packaging products are made from plastics, steel and paper.

As previously announced, proceeds from the sale will be used to partially fund the company's plan to repurchase approximately 50 million shares by the end of 2014 in order to offset the EPS dilution associated with this divestiture. As of the end of 2013, the company had repurchased approximately 14 million shares in conjunction with this plan.

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

ITW is a Fortune 200 global diversified industrial manufacturer of value added consumables and speciality equipment with related service businesses. ITW's revenues totalled US$14.1 billion in 2013.