Business News
BRAMBLES TO STRENGTHEN POSITION AS A GLOBAL LEADER IN POOLING SOLUTIONS THROUGH 923 MILLION ACQUISITION OF IFCO SYSTEMS
Wednesday 17. November 2010 - Brambles Limited is pleased to announce its proposed acquisition of IFCO Systems NV for an enterprise value of 923 million1 (US$1,255 million). IFCO is a leading provider of pooled reusable plastic containers (RPCs) to the food supply chain worldwide and of pallet services in the USA. Highlights of the proposed transaction include:
Agreement to acquire 95.9% of IFCO, followed by a minority buy-out process
Earnings per share accretive from the point of ownership2
Acquisition enterprise value of 7.2 times Brambles pro forma EBITDA forecast for IFCO for the year ending 30 June 20112
Transaction funded with approximately 50% equity and 50% debt
IFCO senior executive management contracted until June 2014
Subject to regulatory approvals
Brambles CEO Tom Gorman said: “The purchase of IFCO represents a unique opportunity for Brambles to enhance its position as a leading pooling solutions provider and acquire operations with a strong growth profile.
“IFCO is a natural fit with Brambles existing RPC and pallet businesses and will allow us to continue to deliver on our strategy of diversifying our revenue base by product , geography and customer type.
“Brambles will combine IFCOs and CHEPs RPC businesses over time, creating a global RPC business with a broad base in Europe from which to pursue growth and a strong position in the fast-growing RPC sector in the Americas.
“IFCOs operations servicing the non-pooled white wood pallet sector in the USA will complement CHEPs existing pallet pooling operations, allowing Brambles to broaden its customer service offering, target the small-to-medium sized enterprise sector more effectively and improve asset control.”
Completion of the transaction is subject to merger control clearance in the USA and certain European countries in addition to customary conditions precedent. Brambles anticipates clearance occurring within nine months.
Given these timing considerations, Brambles is not currently forecasting any contribution from IFCO to its sales revenue or statutory operating profit3 for the financial year ending 30 June 2011. On a pro forma basis, Brambles estimates the acquisition would be approximately 5% earnings per share accretive2 for the financial year ending 30 June 2011.
Transaction considerations
Brambles has entered into binding agreements to acquire 95.9% of IFCO for 13.50 a share, comprising 93.4% from Apax Partners and 2.5% from other parties. This price translates to an equity value for IFCO of 696 million and an enterprise value of 923 million, including net debt of 227 million. Brambles will retain all IFCO cash flows generated from 1 July 2010. The final purchase price per share will increase by 12% per annum from 1 November 2010 until transaction completion.
Brambles will announce today its intention to make a public tender offer for IFCOs shares at 13.504 a share, consistent with requirements on the Frankfurt Stock Exchange, on which IFCOs shares are listed.
The public tender offer is pursuant to a separate offer document, details of which will be available on Brambles website, www.brambles.com. Brambles will publish documents relating to this offer within approximately four to six weeks.
Following the acquisition of shares under the binding agreements and the public tender offer, Brambles intends to engage in a minority buy-out process for all shares. In the Netherlands, where IFCO is incorporated, a 95% stakeholder may request to complete a minority buy-out.
Funding
Brambles will fund the equity component of the acquisition using an underwritten share purchase plan for A$110 million, details of which are listed in Appendix iii, and the underwritten dividends from its next three dividend reinvestment plans, commencing with the 2011 interim dividend. Brambles will fund the debt component of the acquisition using existing undrawn credit facilities. Brambles does not expect any change to its credit ratings of BBB+ and Baa1 from Standard & Poors and Moodys Investors Service respectively.
1 Brambles will retain all IFCO cash flows generated from 1 July 2010. The final purchase price per share will increase by 12% per annum from 1 November 2010 until transaction completion.
2 Refer Appendix ii.
3 Guidance excludes estimated transaction expenses, treated as Significant items, from the proposed acquisition.
4 The final purchase price per share will increase by 12% per annum from 1 November 2010 until transaction completion.