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Australia's Brambles says it is in buyout talks with PE firm after $13.9 bln deal report

05/15/2022 | 09:52pm EDT

* Brambles shares jump as much as 13.3%

* Deal could be among Australia's largest PE-backed takeovers

* Expect at least a A$13/share offer - Citi analysts

* Brambles also mulling "strategic options"

May 16 (Reuters) - Brambles Ltd said on Monday it was evaluating a potential A$20 billion ($13.89 billion) takeover offer from Europe's CVC Capital Partners, becoming the latest Australian corporation to land in the crosshairs of private equity.

Shares of Brambles, which had a market valuation of A$16.65 billion at Monday's end, soared as much as 13.3% to an eight-month high of A$11.82 during the session. The stock saw its best single-day performance in 19 years.

If successful, the deal could be one of the biggest private- equity-backed takeovers in the country, rubbing shoulders with U.S. private equity giant KKR & Co's $14.8 billion play for hospital operator Ramsay Health Care.

Canadian PE firm Brookfield Asset Management has also made bids for AGL Energy, Uniti Group and LaTrobe Financial so far in 2022. Earlier, Sydney Airport was bought out for $17.4 billion a consortium that included Australian pension funds.

Brambles, which rents crates and pallets globally to fast-moving consumer goods companies including retailing giant Walmart, is well-positioned to benefit from the current crunch in container availability amid a pandemic-fuelled boom in e-commerce activity.

"They have a catalyst coming up in terms of whether to embrace plastic pallets and move away, in some respects, from timber pallets, as Walmart goes that way," said Henry Jennings, senior analyst and portfolio manager at Marcustoday Financial Newsletter.

"That's , I guess, a bit of a catalyst for private equity to have a look at that."

The company has also received some investor ire for its proposal to build a plastic pool for its customers, including big-box retailer Costco, in the United States.

Brambles said the engagement was "preliminary" and that it had received no formal proposal from CVC. It did not put a number on the deal.

A spokesperson for CVC Capital Partners declined to comment. A local newspaper pinned the deal value at A$20 billion, including debt, while analysts at Citi said CVC may have to pay at least A$13 a share, bringing the total deal value to about A$19 billion, as per levels at Monday's close.

In its April trading update, Brambles had flagged headwinds from supply chain constraints amid the Russia-Ukraine conflict and rising inflation that will affect its outlook for the next year.

"The board is also considering other strategic options for the company that maximise shareholder value," it said on Monday.

($1 = 1.4403 Australian dollars) (Reporting by Savyata Mishra and Harshita Swaminathan in Bengaluru; editing by Jonathan Oatis, Subhranshu Sahu and Maju Samuel)

© Reuters 2022
Stocks mentioned in the article
ChangeLast1st jan.
AGL ENERGY LIMITED 0.86% 8.19 Delayed Quote.33.39%
BRAMBLES LIMITED 2.16% 10.88 Delayed Quote.2.35%
BROOKFIELD ASSET MANAGEMENT INC. 2.15% 58.87 Delayed Quote.-22.93%
COSTCO WHOLESALE CORPORATION 1.97% 484.37 Delayed Quote.-14.68%
KKR & CO. INC. 4.70% 48.57 Delayed Quote.-34.81%
RAMSAY HEALTH CARE LIMITED 0.55% 71.52 Delayed Quote.0.03%
UNITI GROUP INC. -1.67% 10.01 Delayed Quote.-28.55%
UNITI GROUP LIMITED 0.00% 4.91 Delayed Quote.10.34%
US DOLLAR / RUSSIAN ROUBLE (USD/RUB) -1.63% 53.6 Delayed Quote.-27.29%
WALMART INC. 0.08% 123.72 Delayed Quote.-14.56%
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