Publicly traded Armstrong Flooring has agreed to sell its Wood Flooring segment to American Industrial Partners (AIP) for $100 million.
Armstrong Flooring (NYSE: AFI) (www.armstrongflooring.com) designs, manufactures and sells flooring products in North America and the Pacific Rim. The company, headquartered in Lancaster, PA, operates through two segments, Resilient Flooring and Wood Flooring.
The Wood Flooring segment provides hardwood flooring products under the Armstrong and Bruce brand names for use in residential construction and renovation, as well as in commercial applications, including stores, restaurants, and offices.
The segment’s products are sold to independent wholesale flooring distributors, large home centers, retailers, flooring contractors, and the manufactured homes industry, as well as through architects, designers, end users, and regional and national builders. Armstrong’s Wood Flooring segment is comprised of six US manufacturing facilities primarily serving the North American region. The business has approximately 1,700 employees.
Under the terms of the agreement, AIP will own the Bruce brand and all other Wood Flooring segment brands and will have full access to the Armstrong Flooring brand for the sale of wood products for two years after closing. With a purchase price of $100 million, this transaction is valued at approximately 7.2 times the Wood Flooring segment’s trailing twelve month Adjusted EBITDA of $13.8 million.
Armstrong’s Resilient Flooring segment offers a range of floor coverings primarily for homes and commercial buildings under the Armstrong brand and includes luxury vinyl tile (LVT) products, vinyl tile flooring, vinyl sheet products, and other laminate products. This segment operates nine manufacturing facilities and has approximately 1,800 employees.
“Today’s announcement demonstrates our commitment to maximizing shareholder value and focusing our portfolio on profitable growth strategies,” said Don Maier, CEO of Armstrong Flooring. “The wood flooring industry has been impacted by changing market dynamics and now is the right time to deepen our focus on LVT and other resilient flooring categories, where we are confident fundamentals remain strong for future growth.”
“Don and I believe this strategic decision empowers both the resilient and wood flooring businesses to better realize their core strengths and pursue strategies for growth, product innovation and quality, and exceptional service to customers,” said Rick Hoffman, a Partner at American Industrial Partners. “Our companies look forward to working closely with each other to ensure a seamless transition for employees, customers and suppliers.”
American Industrial Partners makes equity and debt investments in North American-headquartered industrial companies that have revenues from $100 million to $750 million. Transaction values are typically less than $500 million. The firm was founded in 1989 and is headquartered in New York (www.americanindustrial.com).
Goldman Sachs is the financial advisor to Armstrong Flooring on this transaction which is expected to be completed at the end of the fourth quarter of 2018.
© 2018 Private Equity Professional | November 16, 2018