ITW, which is retaining a 49% stake in the business, will receive $1.05 billion in proceeds, including CD&R's equity plus debt.

The target manufactures and distributes high-pressure laminates and other fine-surfacing materials and components used in furniture, office and retail space, countertops, worktops and other applications under the Wilsonart, Resopal, Polyrey and Arborite brands. The business, which posted 2011 revenue of $1.1 billion, has operations in North America, Europe and Asia.

The deal gives Wilsonart an enterprise value of about $1.43 billion.

CD&R has obtained committed financing from Barclays plc, Citigroup Global Markets Inc., Credit Suisse Group, Deutsche Bank AG, Goldman Sachs Bank USA, Morgan Stanley and UBS Investment Bank.

The private equity firm used equity from its eighth fund, which closed in 2009 with $5 billion, to finance the deal.

"For ITW, the transaction will allow us to focus more resources on our core platforms as well as retain a share in the value of the business as global construction end markets improve over the coming years," said David B. Speer, ITW chairman and CEO, in a statement.

A source familiar with the matter said the acquisition is the result of exclusive negotiations and not an auction process.

Glenview, Ill.-based ITW said it will use the proceeds from the sale to repurchase shares to help offset associated earnings dilution.

Based on the expected completion date, ITW said it is maintaining its third-quarter 2012 income per share from continuing operations guidance range of $1.03 to $1.11.

Paul Pressler, a CD&R operating partner, will assume the role of interim chief executive officer of Wilsonart upon the close of the transaction, expected in the fourth quarter.

ITW acquired the Wilsonart, Resopal and Arborite brands in 1999 as part of its acquisition of Premark International Inc. for $3.4 billion. In 2011, the decorative-surfaces segment had operating margins of 12%, according to company information.

This is CD&R's third carve-out deal in the past two years.

In November 2010 CD&R agreed to buy a 51% stake in Tyco International Ltd.'s electrical and metal products business in a deal valuing the target at $1 billion. The business was renamed Atkore International Inc. CD&R invested $306 million for a 51% stake in the business, and obtained $465 million in third-party financing through high-yield bonds and an asset-backed financing.

In August 2011 industrial conglomerate Ingersoll-Rand plc agreed to sell a 60% interest in its stationary refrigerated display case unit Hussmann International Inc. to CD&R for $370 million. Ingersoll-Rand kept a 40% stake.

ITW's shares were up 2.3%, at $58.93, in midday trading on the day the sale of the decorative surfaces business was announced.

Debevoise & Plimpton LLP partners Franci J. Blassberg, Kevin A. Rinker, Jeffrey P. Cunard, Andrew M. Levine, Jonathan F. Lewis, Jeffrey E. Ross and David H. Schnabel; counsels Kyra K. Bromley, Stuart Hammer and Rafael Kariyev; and associates Christopher R. Aung, Grant Bokerman, Erin Cleary, Nicholas Folly, Uri Herzberg, Brian D. Hirsch, David P. Iozzi, Meir D. Katz, Benjamin T. Lawson, Scott B. Selinger, Tulani E. Thaw and Alan J. Yurowitz were CD&R's legal advisers.

Barclays, Citigroup Global Markets, Credit Suisse, Deutsche Bank Securities Inc., Morgan Stanley and UBS Investment Bank acted as CD&R's financial advisers. Deutsche Bank's bankers on the deal were managing directors Michael Santini, Tom Bradshaw and Ed Roland and vice president Javier Diaz.