August 29, 2018 / 4:04 PM / 3 months ago

Illinois Toolworks-backed Wilsonart explores sale - sources

NEW YORK, Aug 29 (Reuters) - Wilsonart, the maker of countertops and other furniture-manufacturing materials whose owners include industrial conglomerate Illinois Toolworks Inc , is exploring a sale that could value the private company at $2.75 billion, three people familiar with the matter said on Wednesday.

Private equity firm Clayton, Dubilier & Rice, which owns the majority of the Austin, Texas-based company, has hired Goldman Sachs to assist in the auction, the people said, asking not to be named because the matter is private.

CD&R, Wilsonart and Goldman Sachs declined to comment. ITW did not immediately respond to requests for comment.

If a sale of Wilsonart is successful, it would mark one of the biggest deals of the year in the building products space with robust residential construction activity continuing uninterrupted a decade on from the last housing downturn.

Wilsonart is holding informal meetings with a number of prospective buyers, which include other private equity firms, one of the people said. There is no guarantee a sale will result from these discussions and plans could still change, the people cautioned.

Wilsonart is the largest player in the countertops and laminates business and substantially larger than its nearest competitors Fletcher Building Ltd-owned Formica Group, and Panolam Surface Systems.

Wilsonart, whose products include laminates and other surfacing materials used in furniture and office space, has earnings before interest, tax, depreciation and amortization (EBITDA) of around $275 million and the company could fetch more than 10 times that amount, one of the people said.

A sale at the $2.75 billion valuation its owners are seeking would represent a strong return. New York-based CD&R in 2012 paid $395 million to buy a majority stake in Wilsonart, which at the time was ITW's decorative surfaces business. ITW, which has a market capitalization of around $46 billion, received a total of $1.05 billion in the deal, including debt, and retained a 49 percent stake in Wilsonart.

The company operates under the Wilsonart, Resopal, Polyrey and Arborite brands, selling primarily through a network of company-owned and exclusive, independent distributors in North America and non-exclusive, independent distributors internationally, according to company materials.

A deal would follow the sale in April of wholesale building products distributor SRS Distribution Inc to private equity firm Leonard Green & Partners LP for more than $3 billion, including debt.

Reporting by Joshua Franklin and Harry Brumpton in New York Editing by Susan Thomas

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