Brambles Divesting Businesses

Australia-based company Brambles announced that it will be taking steps to streamline the Brambles Group and unify its dual-listed companies structure by the creation of a new single holding company focused on its premium growth businesses, CHEP and Recall.

The CHEP division of Brambles is focused on pallet and container pooling services, serving many of the world’s largest companies. CHEP issues, collects, repairs/washes and reissues more than 265 million pallets and containers from a global network of more than 500 service centers in 42 countries.

The Recall division operates an extensive network of document shredding and storage firms.

The key elements of the announcement are: a focus on growing CHEP and Recall, while divesting the company’s other businesses -- Cleanaway, Brambles Industrial Services  and the Regional Businesses.

The company also announced that is seeking to create a structure by unifying the DLC under a single Australian holding company with a primary listing on the Australian Stock Exchange and a secondary listing on the London Stock Exchange.

The proposed divestments and unification of the DLC are expected to be completed within 12 months.

Don Argus, chairman of Brambles, said, “The board believes that focusing the Brambles Group on its key businesses with premium growth potential under a simplified corporate structure will provide a solid platform for building long term shareholder value.

“The formation of the DLC in 2001 was essential to the integration of all the Brambles businesses under common ownership and control. This has facilitated the strong turnaround in Brambles over the past two years, enabling us to reposition Brambles with a focus on CHEP and Recall.

“Following the proposed divestments, the Board has decided that it will be appropriate to unify the DLC in a way that will leave shareholders with the same economic interest as they now hold.

“The proposed unification will reduce complexity and costs, provide greater strategic flexibility, enhance Brambles’ position as a leading company on the ASX and eliminate the differential between the share prices of Brambles Industries Limited on the ASX and Brambles Industries plc on the LSE.”

David Turner, Brambles’ CEO, said: “The decision to focus on CHEP and Recall through the divestment of Cleanaway, Brambles Industrial Services and the Regional Businesses is a significant event in the development of Brambles which will allow us to further optimize capital allocation and maximize value for Brambles’ shareholders.

CHEP and Recall together contributed 54 percent of Brambles’ sales and 72 percent of Brambles’ comparable operating profit in the 2005 financial year. While CHEP is the largest component of Brambles’ business, the company also has made several strategic acquisitions for the Recall division. Most recently Brambles agreed to purchase AUSDOC, a Melbourne, Australia-based information management system. That deal was granted approval from the Australian Competition and Consumer Commission and Foreign Investment Review Board.

Over the three years to 30 June 2005, CHEP and Recall combined have:

As for the company’s divestiture program, in October, Brambles announced the sale of Cleanaway Germany to SULO, a German waste management firm..

Further businesses to be divested are: Cleanaway (UK, Australia, New Zealand and Asia); Brambles Industrial Services (Northern Hemisphere and Australia); and the Regional Businesses (Interlake, Eurotainer and TCR).