Sydney – Brambles today announced that it has entered into a binding agreement to sell its IFCO reusable plastic containers (RPC) business to Triton and Luxinva (a wholly-owned subsidiary of the Abu Dhabi Investment Authority) for an enterprise value of US$2.51bn. The transaction is subject to customary regulatory approvals and is expected to be completed during the second quarter of calendar year 2019.
Brambles’ Chairman Stephen Johns said: “In August 2018, we announced that we would seek to separate IFCO through either a demerger or a sale by way of a dual track process. As well as progressing the demerger option, a robust and competitive sale process generated strong interest. We are pleased today to announce the sale of IFCO which we believe delivers greater value for shareholders, including a significant return of cash proceeds to shareholders.
“The IFCO team has been an important and valued part of the Brambles business, and on behalf of the Board I’d like to thank them for their contribution over the past eight years. The interest shown in IFCO during the separation process is testimony to how highly appreciated the IFCO business is, and we wish Wolfgang Orgeldinger and his team every success in the future,” Stephen said.
Brambles’ CEO Graham Chipchase said: “The sale will allow Brambles to focus on our strategic priorities and to pursue continued revenue growth within our core markets, while also reviewing additional opportunities in emerging markets, through product and service innovation and use of technology through the supply chain. Our ambition remains to lead the platform pooling industry in customer service, innovation and sustainability”.
In FY18, IFCO generated revenues of US$1,098m, EBITDA of US$248m and Underlying Profit of US$133m[1].
Brambles expects to receive approximately US$2.36bn of net cash proceeds from the transaction, after taxes, transaction costs, and balance sheet items, subject to customary closing adjustments.
Return of proceeds to shareholders
Brambles intends to return up to US$1.95bn of proceeds from the transaction to shareholders, through a combination of a pro-rata return of cash of approximately US$300m and an on-market share buy-back of up to US$1.65bn. The balance of the proceeds will be used to repay debt to maintain leverage in line with the Board approved credit policy.
The pro rata return of cash, which will be made to all shareholders, is expected to be approximately 29 Australian cents per share, in line with (and in addition to) Brambles’ annual dividend payout.
Further details of the on-market buy-back and pro-rata return of cash will be provided to shareholders upon completion of the transaction. Both components are subject to the completion of the transaction, with the prorata return of cash also subject to obtaining an ATO ruling and shareholder approval.
As previously announced, Brambles is
evaluating its dividend policy and will update the market on the outcome of
this evaluation as part of its 2019 full-year results presentation. Brambles
reaffirms its commitment to maintaining a strong investment grade credit rating
and its intention to maintain its current progressive dividend policy for its
2019 full-year dividend[2].
[1] Restated in accordance with AASB 15, per the 1H19 published Background information.
[2] The actual amount of the 2019 full-year dividend (and any future dividends), consistent with Brambles’ current dividend policy will, however, remain subject to Brambles financial performance, cash requirements during the period and any unforeseen circumstances.
