Brambles Plans $1.95 Billion Return to Holders from IFCO Sale
February 24 2019 - 5:21PM
Dow Jones News
By Robb M. Stewart
MELBOURNE, Australia--Australian reusable crates and pallets
supplier Brambles Ltd. (BXB.AU) flagged the return of up to US$1.95
billion to its shareholders after signing a deal to sell a
plastic-containers business.
Brambles in a statement Monday said it was selling its IFCO unit
to a wholly owned subsidiary of Abu Dhabi Investment Authority for
an enterprise value of US$2.51 billion.
The sale is expected to wrap up in the second quarter, subject
to regulatory approval, and the company said it intended to return
about US$300 million in cash from the proceeds to shareholders and
buy back up to US$1.65 billion of its own shares. The remainder
would be used to repay debt, it added.
The company has been looking to spin off or sell the IFCO
business since late last year. The unit supplies crates for moving
fresh produce to retailers in Europe, Asia and the Americas.
The planned exit follows earlier deals to sell Brambles' North
American recycled whitewood pallets business and a stake in an
oil-and-gas joint venture with Hoover Container Solutions.
"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," Chief Executive Graham Chipchase said.
The IFCO business generated revenue of almost US$1.1 billion and
earnings before interest, tax, depreciation and amortization of
US$248 million in the last financial year.
Last week, Brambles reported a 27% fall in its half-year profit
to US$319.8 million as it grappled with rising transport and fuel
costs, and after a one-off tax benefit a year ago wasn't repeated.
The company has been seeking a turnaround after its share price was
badly hit in the wake of a rare profit warning and hefty writedowns
in the 2017 financial year.
On Monday, the company reiterated it was evaluating its dividend
policy and would update investors with its full-year results,
though it remained committed to maintaining a strong
investment-grade credit rating and maintaining a progressive
dividend policy for fiscal 2019.
Write to Robb M. Stewart at robb.stewart@wsj.com
(END) Dow Jones Newswires
February 24, 2019 17:06 ET (22:06 GMT)
Copyright (c) 2019 Dow Jones & Company, Inc.
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