IFCO Acquisition Gives Brambles Fresh Focus

In the pallet and reusable container business, the proposed IFCO acquisition by Brambles ranks as an all-time blockbuster. It is back in the reusable plastic container (RPC) business in a very big way, along with a new presence in the U.S. dock sweep and white pallet marketplace. (On the press side of things, we will be a little more curious to see how new CHEP pallet wins are postured, where customers in such dispatches would typically comment on the benefits of CHEP versus white wood.)

Bob Trebilcock of Modern Materials Handling interviewed Derek Hannum of CHEP to get his take on the IFCO acquisition. Click here to read that interview.

The acquisition is exciting. It gets Brambles back into the RPC business it retreated from in 2005, as well as a presence in a lot of European and Latin American markets. I actually pulled out one of my dusty old strategy books from business school and looked at good reasons to acquire a profitable business. Instant growth, new geography, adding of complementary products, and cross-selling opportunities all look like decent enough ideas. And maybe the best bonus reason of all is to distract shareholder and analyst focus away from iGPS onto more positive business opportunities.

Comments

  1. Is iGPS next? At what point in the industry consolidation does competition suffer and prices become predictable? Are we setting up a too big to fail scenario?

  2. Rick LeBlanc says:

    Hi Michael. Good questions. The regulators, of course, will burn their incense to determine if pallet and reusable container competition still holds dominion over the land. Beyond that, I’m still struggling to get a handle. At first blush, we have Brambles taking significant control of a substitute good for the rental pallet, that being the white wood pallet. Did they buy the business primarily for the RPCs, and plan to spin off the white wood business, or do they intend to keep both? I would be interested to hear the reaction of customers for pallets and RPCs.

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