A supply-chain logistics company, Brambles Limited (ASX: BXB) has completed the sale of its IFCO RPC pooling business for a total consideration of US$2.51 billion, following the necessary regulatory approvals.
On 25th February 2019, the company entered into a binding agreement to sell its IFCO reusable plastic containers business to Triton and a Luxinva (a wholly-owned subsidiary of the Abu Dhabi Investment Authority), believing that it would deliver greater value for shareholders, including a significant return of cash proceeds to shareholders.
IFCO is the global-leading provider of RPC pooling solutions, which helps retailers and producers to reduce costs and increase sales by improving efficiency, product quality, sustainability and safety throughout their supply chain.
The company who has bought IFCO reusable plastic containers (RPC) business, Triton, currently has 37 companies in its portfolio with a combined sales of around €13 billion and around 84,000 employees. The other buyer, Abu Dhabi Investment Authority, is a globally diversified investment institution, which is focused on long-term value creation.
From the total enterprise value of US$2.51 billion, the company is going to return up to US$1.95 billion of proceeds to shareholders via a combination of a pro-rata return of cash of around US$300 million and an on-market share buy-back of up to US$1.65 billion. The remaining proceeds will be used to repay the debt to maintain leverage in accordance with the Board approved credit policy.
The company is planning to commence the on-market buy-back in early June 2019, before pausing on 23rd June 2019, when the company enters its blackout period until its 2019 full year result announcement on 21st August 2019.
The company informed that the pro rata return of cash requires an ATO ruling and shareholder approval at the 2019 Annual General Meeting. After the ruling and shareholder approval, the pro rata return of cash is expected to be paid to shareholders in October 2019.
For the first nine months of the FY 2019, the company reported sales revenue from continuing operations of US$3,409.0 million, up 7% on the previous corresponding period (pcp) at constant FX rate. From CHEP Americas, the company reported sales revenue growth of 6% on the back of strong price realisation and expansion. From CHEP EMEA, the company reported sales revenue growth of 8% with modest like-for-like volume growth in the European pallet and automotive businesses. Further, in CHEP Asia Pacific, the sales revenue was 4% higher than the pcp.
Sales revenue for the first nine months of FY19 & FY18 (Source: Company Reports)
Now, let’s take a glance at the company’s share performance and the returns it has posted over the past few months. At the time of writing, i.e., on 3rd June 2019, AEST 2:45 PM, the stock of the company was trading at a price of $12.090, down 0.165% during the day’s trade with a market capitalisation of ~$19.31 billion. The stock has provided a YTD return of 21.34% and also posted returns of 18.03%, 1.00% & -0.57% over the past six months, three and one-month period, respectively. Its 52-week high price stands at $12.760 and touched 52 weeks low at $8.580, with an average volume of ~3,567,905.
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