ITW Plans To Sell Industrial Packaging Segment; Revises Q3, FY13 EPS View

(RTTNews) - Illinois Tool Works Inc. (ITW) announced that its board has authorized a plan to commence a sale process for its Industrial Packaging segment.

The Company announced in February that it was reviewing strategic alternatives for the segment, which had revenues of approximately $2.4 billion in 2012.

The company said today that it plans to reclassify the Industrial Packaging segment's businesses to discontinued operations in the third quarter of 2013. The company expects the sale process to conclude by mid-2014.

"After carefully considering the underlying value of the business, the level of preliminary interest from potential buyers and a favorable debt market, the Company and our board of directors have opted to initiate a sale process for the Industrial Packaging segment," said Scott Santi, president and chief executive officer.

ITW noted that it intends to utilize its existing share repurchase authorization to offset the full amount of divestiture-related EPS dilution through a combination of sale proceeds, free operating cash flow and additional leverage. As a result, the Company expects to repurchase approximately 50 million shares through a program that will begin immediately and conclude no later than the end of 2014.

The company now expects earnings per share of $0.84 - $0.92 for the third-quarter, and earnings per share of $3.50 - $3.66 for fiscal 2013. Previously, the company had expected earnings per share of $1.06 - $1.16 for the third-quarter, and earnings per share of $4.10 - $4.30 for fiscal 2013. Analysts polled by Thomson Reuters expect the company to report earnings of $1.11 per share for the third-quarter, and $4.21 per share for fiscal 2013. Analysts' estimates typically exclude special items.

The revised earnings per share forecast for third quarter and full-year 2013 reflected the earnings per share impact of Industrial Packaging moving to discontinued operations. Separate from Industrial Packaging, the company also expects to incur a $40 million discrete tax charge in the third quarter related to foreign earnings.