Armstrong Flooring Inc. has entered into a definitive agreement to sell its wood flooring segment to an affiliate of American Industrial Partners (“AIP”) for a purchase price of $100 million, subject to customary adjustments for working capital, debt, and other matters.
The transaction is valued at approximately 7.2 times the wood flooring segment’s trailing twelve month Adjusted EBITDA. As of October 31, 2018 Armstrong Flooring’s wood flooring segment comprised six U.S. manufacturing facilities primarily serving the North American region and approximately 1,700 employees. The transaction, which is subject to customary closing conditions, is expected to be completed at the end of the fourth quarter of 2018.
The net proceeds to the company from the transaction after purchase price adjustments are non-taxable and expected to be $85 to $90 million.
Upon closing of the sale, Armstrong Flooring will intensify its focus on Luxury Vinyl Tile (“LVT”) and rigid core, as well as its range of resilient products including Vinyl Composition Tile and resilient sheet. AIP will gain Armstrong Flooring’s wood flooring product portfolio and existing network of wood floor manufacturing facilities. AIP will own the Bruce brand and all other wood flooring segment brands. To ensure a seamless transition, AIP will have full access to the Armstrong Flooring brand for the sale of wood products for two years after closing.
Don Maier, Chief Executive Officer, commented, “Today’s announcement demonstrates our commitment to maximizing shareholder value and focusing our portfolio on profitable growth strategies. 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.”
Rick Hoffman, Partner at AIP, said, “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. Our companies look forward to working closely with each other to ensure a seamless transition for employees, customers and suppliers.”