Brambles, GKN unveil A$20b industrial services merger

Brambles, GKN unveil A$20b industrial services merger

SYDNEY, Australia (Reuters): Australia's Brambles Industries
Ltd and Britain's GKN Plc have hammered out the terms of a long
awaited industrial services merger to create a dual listed group
with a market value of A$19.8 billion (6.9 billion pounds).

The "new Brambles" would combine Brambles existing businesses
and engineering group GKN's share of their Chep pallet pooling
and Cleanaway waste management joint ventures and other GKN
businesses, the groups said on Thursday.

GKN chief executive CK Chow, who joined the cars to
helicopters group in 1996, will head up the merged entity which
would be headquartered in Australia and listed in Sydney and
London.

Brambles chief executive John Fletcher, who is due to step
down in July after 26 years with the company, said the proposed
merger would assist global growth and allow a more logical
approach to funding the businesses.

Shareholders in Brambles, one of the Australia's oldest
companies, cheered the proposed deal, sending the stock up A$1.50
to an intraday high of A$50.25, before closing at A$50.00.

GKN eased 2.5 pence or 0.3 percent in early London trade to
765 pence.

Brambles and GKN, whose association in the Chep and Cleanaway
businesses stretches back 27 years, have long strived to thrash
out a deal to place the ventures under the same umbrella.

The current plan would bring this about, give Brambles access
to deeper pools of international capital and allow GKN to operate
its core aerospace and autoparts business separately.

"They will have consistent management across all the Chep and
Cleanaway operations. It gives them more flexibility in their
growth opportunities going forward and access to capital
markets," said Brent Mitchell, research manager at Shaw
Stockbroking.

Under the nil premium merger, Brambles would control about 57
percent of the new group and GKN 43 percent.

"After years of trying to do this, even if there was the
smallest hint that there was a premium, even if there was the
smallest hint, there was a winner or loser, we would not have got
agreement from both boards," Fletcher told an analysts briefing.

Under the deal, GKN would separate its support services from
its engineering operations and put them in a new UK company,
Brambles Industries Plc, which would be combined with the
Australian Brambles Industries Ltd.

GKN's Chep South Africa, Chicago-based Interlake conveyor belt
and storage systems and Meineke U.S. retail businesses will also
be folded into the new company which would operate in over 30
countries.

The combined revenue of the new group would be more than A$7.1
billion a year, based on unaudited proforma figures for the year
to June 2000.