Brambles, one of Australia’s oldest companies, has entered talks over a potential A$20bn (US$13.8bn) sale of the business as private equity and infrastructure funds target the country’s listed assets.
The transport and logistics company said it had held talks with CVC Capital Partners over potentially taking the group private but that the negotiations were preliminary, incomplete and no formal bid had yet been received.
Brambles, which has a market capitalisation of A$17bn and debt of A$3bn, said it would consider “other strategic options” to maximise shareholder value.
The company’s shares gained 11 per cent to A$11.60 after it confirmed a report in the Australian Financial Review that it had been approached by private equity group CVC.
Brambles, which traces its roots to 1875, was seen as a potential takeover target as deals in the Australian market hit record highs last year and made almost every company vulnerable to a bid. The value of takeovers in the country last year was more than three times the 10-year average, driven by private capital that accounted for more than a third of all deals.
The logistics company, named after its founder who was a young butcher called Walter Bramble, was listed in 1954 as a transportation and logistics services business supplying BHP. It acquired a pallets and logistics business from the Australian government before expanding into waste management and document management. A merger with GKN’s services business at the turn of the century created a global bellwether for trade controlling 3.5mn wooden pallets on which much of the world’s supply chains rely.
Brambles has divested many of those businesses in recent years and has come under pressure from activist investors over large capital plans to invest in plastic pallets. It launched a big restructuring plan in 2019.
The Australian company is run by Graham Chipchase who previously ran UK drinks canmaker Rexam before its £4bn sale to US rival Ball Corp.
Matt Ryan, an analyst with Barrenjoey, argued that Brambles ticked many boxes for a private equity bidder as it had underperformed the Australian market by 20 per cent in the past two years and a break-up of the business could generate substantial value.
“The benefits that a global pallet company sees across continents is generally overstated in our view. As a result, a break-up of the assets is something that might be considered,” he said.