Armstrong Flooring Inc. has agreed to sell its wood flooring business by the end of the year to a New York-based private equity firm.
The sale, which includes six of Armstrong‘s wood flooring manufacturing facilities, is to American Industrial Partners, a middle market private equity firm with a focus on industrial businesses.
American Industrial has agreed to purchase the business for $100 million and will continue to sell under the Armstrong name for the next two years. The deal is expected to close in the fourth quarter
A press release from the Manor Township-based flooring company said the sale will allow it to focus on its resilient tile products, which have proven to be Armstrong’s fastest-growing line.
In Armstrong’s earnings report for the third quarter of 2018, the company said its wood flooring sales were $101.6 million, down from $114.1 million during the same quarter in 2017.
Armstrong’s resilient sales went the opposite direction, jumping from $194.4 million in the third quarter of 2017 to $208.1 million in the third quarter of 2018. The company will retain six of its United States resilient tile manufacturing facilities (including one in Lancaster County) along with a facility in China and one in Australia.
“We believe now is the right time to deepen our focus on luxury vinyl tiles and other resilient categories, CEO Don Maier said. “We determined that separating the resilient and wood businesses is the best way for both businesses to realize their potential.”
American Industrial will absorb over 1,700 employees from the facilities it is obtaining along with Armstrong’s wood flooring brands, like Bruce Hardwood Flooring.
“Our companies look forward to working closely with each other to ensure a seamless transition for employees, customers and suppliers,” Rick Hoffman, a partner at American Industrial, said in a statement.
Plans call for the company to sub-lease office space at the Armstrong Lancaster campus.
Stephen Trapnell, Armstrong’s corporate communications manager, said Armstrong is expected to let go 50 employees at its headquarters as it makes the transition to a smaller company. He said that Armstrong will have approximately 1,800 employees after the transition is complete.
“Following the sale, we will go from 14 plants to eight,” Trapnell said. “Certainly we are restructuring the company to align with that.”
Trapnell said that with competition at a high in the hardwood flooring market, a company that can focus on that portion of the business can thrive.
“I believe that the wood flooring company will have very strong brands and an experienced managing team and a network of plants that will compete very effectively,” he said.
Armstrong expects to make between $85 million to $90 million in net proceeds on the sale, which Maier said will be put back into the company towards further expansion.
“We feel with this transaction it gives us a lot of flexibility to further invest in our growth strategies,” he said. “We are excited about the opportunities on the horizon for the resilient segment.”