Bloomberg Anywhere Remote Login Bloomberg Terminal Demo Request


Connecting decision makers to a dynamic network of information, people and ideas, Bloomberg quickly and accurately delivers business and financial information, news and insight around the world.


Financial Products

Enterprise Products


Customer Support

  • Americas

    +1 212 318 2000

  • Europe, Middle East, & Africa

    +44 20 7330 7500

  • Asia Pacific

    +65 6212 1000


Industry Products

Media Services

Follow Us

Illinois Tool Hires JPMorgan, Goldman to Assess Package Unit

Feb. 19 (Bloomberg) -- Illinois Tool Works Inc. hired JPMorgan Chase & Co. and Goldman Sachs Group Inc. to study options including a sale or spinoff of its industrial packaging unit as the company divests less-profitable businesses.

The review is expected to continue through this year, the Glenview, Illinois-based company said today in a statement. The business makes steel, plastic and paper packaging used in transporting goods and had sales of about $2.4 billion last year, Illinois Tool said.

The company, which had revenue of $17.9 billion in 2012, devised the strategy to sell underperforming businesses and consolidate units after Ralph Whitworth’s Relational Investors LLC took a stake last year and pushed for increased profit. Illinois Tool in October completed the $1.1 billion sale of a 51 percent stake in its decorative-surfaces division.

“The company is going through a methodical review of all its operations and looking to improve its longer-term prospects,” said Eli Lustgarten, an Independence, Ohio-based analyst at Longbow Securities. “Packaging has not exactly been a high-growth sector for many years.”

The packaging unit’s operating margin of 11.7 percent last year lagged behind the company’s 15.9 percent, said Lustgarten, who rates Illinois Tool shares neutral.

‘Largely Done’

With the sale of a majority stake in the decorative-services business and now the potential disposal of the packaging unit, the company is mostly finished with asset sales, Whitworth said in a telephone interview.

“These two pieces were the ones that concerned us the most,” he said. “They’re largely done with the segment consolidation that we had wanted them to focus on, if they complete this transaction.”

The construction products business, with an operating margin of 10.5 percent, also trailed the company’s rate, Lustgarten said. Illinois Tool may be less willing to part with that unit because the industry it serves is showing signs of recovery, Lustgarten said.

“They’re playing the turn in the residential construction with that,” Whitworth said.

Illinois Tool rose 1.5 percent to $64.19 at the close in New York. The shares have gained 5.6 percent this year, as the Standard & Poor’s 500 Index climbed 7.3 percent.

Relational began talks with the company’s management shortly after disclosing a holding in January 2012 that rose to 3.1 percent later in the year. The stake has been cut by 2.2 million shares to 12.3 million shares, or 2.7 percent, according to a Feb. 14 filing.

To contact the reporter on this story: Thomas Black in Dallas at

To contact the editor responsible for this story: Ed Dufner at

Please upgrade your Browser

Your browser is out-of-date. Please download one of these excellent browsers:

Chrome, Firefox, Safari, Opera or Internet Explorer.