Brambles shareholders will get a substantial part of the proceeds of the multi-billion dollar sale of its reusable plastic container business to an Abu Dhabi wealth fund for over $US2.51 billion ($A3.51 billion).
The pallets and container firm told the ASX yesterday it entered a binding agreement to sell its IFCO business to Triton and Luxinva, and expected to complete the deal in the second quarter of 2019.
Brambles had flagged the impending announcement in its interim profit announcement last week.
The shares rose 2.9% to $11.89 yesterday as shareholders realised there would be a flood of loot coming their way and possibly a higher dividend down the track.
Brambles said yesterday it 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.
Brambles said yesterday it intends to return up to $US1.95 billion of proceeds from the transaction to shareholders, through a combination of a pro-rata return of cash of approximately $US300m and an on-market share buy-back of up to $US1.65 billion.
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 a share, in line with (and in addition to) Brambles’ annual dividend payout.
“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,” the company told the market yesterday.
In yesterday’s statement 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 a 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”.
