Brambles Announces Proposed Acquisition of IFCO

Brambles Limited has announced 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 platform, geography and customer type.

“Brambles will combine IFCO’s and CHEP’s 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.

“IFCO’s operations servicing the non-pooled ’white wood’ pallet sector in the USA will complement CHEP’s 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.

  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.

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