BIL brambles industries limited

takeover season, bil next?????

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    GBX 176.00 176.50 176.00 +1.50 +0.71 177.50 175.00 6296251 16:56 176.00

    Up in UK again. The Australian graph looks quite different to the UK graph, the UK graph more uniform, could people be playing around as GE sniffs at BIL's heels?

    Street Talk
    Author: Brett Clegg with Ben Power
    Date: 12/08/2003 00:04:00
    Words: 1481
    Publication: Financial Review
    Section: Equities
    Page: 20
    Source: AFRBreaking

    Brambles must Cleanaway woes

    Last week's news of yet more departures at Brambles ' CHEP USA operations created yet more uncertainty for hapless shareholders, so it's probably no surprise that talk of a "structural solution" to its woes is gaining traction among analysts, fund managers and, most importantly, investment bankers.

    The dual-listed company structure has been a notable failure.

    At one extreme, a wholesale break-up could be envisaged, whereby Recall information systems and Cleanaway waste management are demerged or sold and the proceeds used to buy back Brambles plc stock.

    That would unravel the DLC structure and leave the global CHEP operations as the single asset in an Australian-listed entity, run by CHEP head Victor Mendez, that local investors would be willing to price for its long-term growth prospects.

    (The spread between the UK and locally listed stocks is currently 10.3 per cent).

    A less extreme, and therefore more probable, solution - and one that Macquarie Equities' Ian Myles explored in a note yesterday - would be the sale of Cleanaway Europe to the likes of Veolia Environment's Onyx unit, Biffa or SITA.

    Myles says Cleanaway has failed to participate in the consolidation of the UK waste industry and has only increased its market share to 5 per cent over the past decade. Return on funds has remained high, but Brambles must decide whether to divest Cleanaway Europe or put capital (which it doesn't have without a new issue) into consolidating its position.

    If it sold Cleanaway Europe, past transactions would suggest an enterprise value in the region of 8 to 9 times earnings before interest, tax and depreciation for Cleanaway UK - implying a price tag of €475 million to €500 million ($862 million).

    Cleanaway Germany, which has less appealing dynamics, could sell on an enterprise value-EBITDA multiple of 5 to 7 times, or €350million to €480 million.

    Then there's the rumours that GE Capital is sniffing around. Talk has resurfaced that GE is building a stake under 5 per cent in the plc stock. Interestingly, the US conglomerate exited its Loscam pallet operation in Australia on Friday for $97 million, selling to DB Capital Partners, the private equity arm of Deutsche Bank.

    Deutsche forks out for GE pallet unit
    Author: David Crowe
    Date: 12/08/2003
    Words: 467
    Publication: Australian Financial Review
    Section: Companies And Markets
    Page: 48
    Source: AFR
    General Electric has quit its Australian pallet operation, Loscam, selling the business to a private equity fund in a $97 million buyout launched last Friday.

    The Deutsche Bank private equity fund acquired 99 per cent of Loscam from GE and minority shareholders IAG and the Royal Bank of Canada. It expects to complete the purchase by mopping up other minority shareholdings in the next few weeks.

    The deal positions Deutsche Bank to achieve a relatively rapid return on its investment by taking Loscam public within a year or two.

    ``That's clearly one of our considerations," the director of the Deutsche Bank private equity group, Gene Lorenz, said. ``We think there are multiple paths to exit here."

    An international buyer may be interested in the business, as Loscam generated one-quarter of last year's earnings in Asia and claims 80 per cent of the market in some Asian countries. In Australia, though, it holds only 20 per cent of a market dominated by Brambles.

    Loscam generated sales of $49 million in the year to December, posting earnings before interest, tax, depreciation and amortisation of $23.4 million and EBIT of $11 million.

    Deutsche Bank intends to beef up operations by appointing former Loscam managing director Neil McBain to again run the company.

    ``We actually searched him out," Mr Lorenz said. ``We looked at the deal, and what was missing from it was management. The key here was being able to find the ex-CEO of the business."

    Mr McBain, who left Loscam after GE bought into it in 1997, was credited with turning the business around under former majority shareholder Pacific Dunlop.

    However, the company's new owner played down suggestions a revitalised Loscam would increase competitive pressure on Brambles.

    ``There's no need for this business to go head-to-head against Brambles," Mr Lorenz said.

    GE has long been touted as a potential Brambles bidder. Speculation of a bid re-emerged this year when Brambles shares sank as low as $3.77, but the stock is now trading 23 per cent above that level.

    Market watchers have suggested that if there was to be a bid, it would be more likely friendly than hostile because of the complications of Brambles' dual-listed structure.

    The buyout, finalised last Friday, was unusual because it required Deutsche Bank to seek the Australian Securities and Investments Commission's approval for a takeover bid for an unlisted company.

    Deutsche Bank issued its formal takeover offer last week and received acceptances from GE, IAG and the Royal Bank of Canada.

    IAG's stake was a legacy of an investment in Loscam by NRMA in 1997, while RBC held its stake as a result of an investment in the same year by Perpetual Funds Management. There are another 59 individuals and trusts holding the remainder of the company.
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