Brambles is continuing its game of 'seek and tell' with its stalker, the Toll Holdings spin-off, Asciano Group Ltd.
The logistics group, which also revealed lower 2007 earnings yesterday, said it was asking for an update on what seems to be new share purchases by Asciano.
Brambles is obviously monitoring its register on a very active basis and every share purchase is being examined, especially those in a number of accounts, mostly connected with Macquarie Bank and Citigroup which bought Brambles shares for Toll Holdings, Asciano's former parent.
Toll CEO, Paul Little bought into the situation again yesterday with the strong hint that his companies was very interested in Brambles, and there are plans, although unspecified.
There's also the hint that Asciano may have got in the way of Toll.
From deals on Tuesday it seems Asciano (AIO) has lifted its stake in Brambles (BXB) to 3.79%, at a cost of more than $600 million.
Brambles said in a statement to the ASX that as a result of transactions registered on Tuesday, the number of Brambles shares in that sub-account has risen by a further 8,175,933.
That account now held 53,656,877 Brambles shares, or 3.79 per cent of Brambles issued capital. BXB shares ended at $13.10 yesterday, down a sharp 29c after the lower profit, while AIO shares shed 8c to $8.62.
At yesterday's closing price those shares had a value of around $740 million.
Toll Holdings, AIO's former parent, has been sprung with a half a per cent stake in BXB but claims it is not cooperating with AIO. It can't without breaching undertakings given to the ACCC.
According to Brambles, Asciano had increased its holdings through Macquarie Bank subsidiary, Belike Nominees Pty Ltd, after earlier lifting its stake in Brambles to 2.84% with transactions registered on August 17. That was disclosed in a letter to the ASX on Tuesday.
Brambles issued a statement to the Australian Stock Exchange saying it would now be serving further notices on Belike Nominees and the Asciano Group, asking for confirmation of the beneficial ownership of the additional shares.
Brambles said it had received a response to an earlier notice issued on Friday, asking about 35,060,462 shares held in the sub-account as at 16 August.
Brambles was told on Tuesday by Macquarie Bank that Belike had no relevant interest in the August 16 shareholding.
"A notice was also issued to MS Corporate Services Pty Ltd ("MSC") with respect to the 16 August Shareholding," Brambles said.
"However, MS Corporate Services has not yet responded to that notice."
During a Sydney briefing for Brambles full year results on Wednesday, CEO, Mike Ihlein, would not comment further on the takeover speculation surrounding Asciano Group.
………………..
Earlier the company had told the ASX that full-year profits fell 5% on what it says was slowing growth at its European operations.
Brambles said net profit for the year to June 30 was US$613.4 million ($A766.5 million), compared to US$647.1 million ($A808.6 million) a year ago.
The drop in the Australian dollar value was because of the higher value of the Aussie dollar at the end of June than at the end of 2006.
Brambles said that it was "again expected to show strong profit growth in 2008".
"All regions in CHEP and Recall are expected to deliver another year of higher sales and strong profit growth.
"We are in an excellent position to accelerate profitable growth in the medium to long term."
The company boosted dividend 26% with a final dividend of 17 Australian cents.
"We expect our strong cash generation to continue in 2008 and will seek approval of shareholders at the annual general meeting … to continue with on-market share buybacks," Mike Ihlein said.
Continuing revenue increased 10% to $US3.87 billion (A$4.84 billion).
The company underwent significant re-organisation in 2007, selling underperforming assets, ending its dual listing in London and buying back shares.
But the company is still generating more cash than it knows what to do with and needs either a major capital management program or a major acquisition to absorb the free cash and use the undergeared balance sheet.
Asciano looks like it is putting itself forward as a candidate: it can't really buy Brambles because of the relative sizes. BXB is three times AIO's market cap, but Asciano does have huge debts in the wake of its spin off from Toll which left Toll with an undergeared balance sheet that could be used in an acquisition.
But not Brambles, as that would breach the undertakings with the ACCC. How Mr Little and Toll try and get around those undertakings will bear watching.
Brambles definitely needs a better performing balance sheet.
