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.