1 Armstrong World Industries Inc. agreed in principle to sell its carpet operations to Shaw Industries Inc.
2 The price wasn't disclosed but one analyst estimated that it was $150 million.
3 Armstrong, which has faced a takeover threat from the Belzberg family of Canada since July, said that disposing of the carpet business would improve 'total financial performance.' The move also would allow the company to concentrate on core businesses, which include ceramic tile, floor coverings and furniture.
4 Moreover, such a sale could help Armstrong reassure its investors and deter the Belzbergs, who own a 9.85% stake in the Lancaster, Pa., company.
5 Analysts expect Armstrong to use proceeds of the sale to reduce debt, buy back stock or perhaps finance an acquisition.
6 The carpet division had 1988 sales of $368.3 million, or almost 14% of Armstrong's $2.68 billion total revenue.
7 The company has been manufacturing carpet since 1967.
8 Recently it upgraded its plants so that it could make stain-resistant products with higher quality dyes.
9 For the past year or two, the carpet division's operating profit margins have hovered around 5%, high by industry standards, but disappointing compared with the 13% to 19% margins for two of Armstrong's chief businesses, flooring and building products.
10 Analysts hailed the planned transaction as being beneficial to Armstrong and Shaw, the market leader in the U.S. carpet industry, with an estimated 17% to 20% share.
11 Shaw, based in Dalton, Ga., has annual sales of about $1.18 billion, and has economies of scale and lower raw-material costs that are expected to boost the profitability of Armstrong's brands, sold under the Armstrong and Evans-Black names.
12 Yesterday, in composite trading on the New York Stock Exchange, Shaw's shares closed ex-dividend at $26.125, up $2.25.
13 Armstrong's shares, also listed on the Big Board, closed at $39.125, up 12.5 cents.
14 Yesterday, Armstrong reported flat earnings for the third quarter and nine months, worsened by the stock dilution of an employee stock ownership plan adopted earlier this year.
15 For the quarter, earnings were $47 million, or 92 cents a share, including a one-time gain of $5.9 million.
16 In the year-ago quarter, earnings were $42.9 million, or 93 cents a share.
17 Yesterday, Armstrong announced an agreement to sell its small Applied Color Systems unit to a subsidiary of the Swiss company, Brauerei Eichof Ltd.
18 The price wasn't disclosed.
19 Armstrong expects to close the sale of the color unit in late November and the carpet sale in December, with the gains to be applied to fourth quarter or first-quarter results.

The price wasn ' t disclosed but one analyst estimated that it was $ 150 million .
analyst
What kind of analyst?