Brambles Limited (ASX: BXB) today announced the completion of the sale of its IFCO reusable plastic containers (RCP) business for US$2.51 billion. Here’s what you need to know.
About Brambles
Brambles is a pooling solutions company specialising in the provision of reusable pallets, crates, containers and associated logistics services through the CHEP and IFCO brands. At the time of writing, Brambles has a market capitalization of more than $19 billion.
Sale of IFCO RCP Business
The plan to sell the reusable plastic containers business was announced in February this year and completed in May 2019. The business was sold to Triton and a subsidiary of the Abu Dhabi Investment Authority (ADIA) for a total of US$2.51 billion.
The sale will generate a $300 million pro-rata return of cash for shareholders and an on-market buy-back of $1.65 billion of shares. The remaining funds will be used to pay down debt.
Share Buy-Back
Brambles announced that the share buy-back will begin “early June 2019” and continue until 23rd June.
The pro-rata return of cash is subject to shareholder approval at the Annual General Meeting (AGM) and an ATO ruling. It is expected to be paid in October 2019.
Is Brambles A Buy?
This recent Rask Media article asked the question “Are Brambles Shares Still Cheap?” and went into more detail on the company’s recent trading updates.
The sale of a non-core asset and a reduction of debt, coupled with an extra payout for shareholders could be seen as a positive move for the company, and one that will set it up to be more competitive in the future. This will be a company to watch for the next few months and the 2019 full year results announcement on 21st August 2019 will provide a clearer picture of the future prospects for Brambles.
For now, though, I’d rather invest in one of the companies mentioned in the free report below.
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Disclosure: At the time of writing, Max does not own shares in any of the companies mentioned.
