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By Robb M. Stewart
MELBOURNE, Australia--Australian reusable crates and pallets supplier Brambles Ltd. (BXB.AU) flagged the return of up to US$1.95 billion to its shareholders after signing a deal to sell a plastic-containers business.
Brambles in a statement Monday said it was selling its IFCO unit to a wholly owned subsidiary of Abu Dhabi Investment Authority for an enterprise value of US$2.51 billion.
The sale is expected to wrap up in the second quarter, subject to regulatory approval, and the company said it intended to return about US$300 million in cash from the proceeds to shareholders and buy back up to US$1.65 billion of its own shares. The remainder would be used to repay debt, it added.
The company has been looking to spin off or sell the IFCO business since late last year. The unit supplies crates for moving fresh produce to retailers in Europe, Asia and the Americas.
The planned exit follows earlier deals to sell Brambles' North American recycled whitewood pallets business and a stake in an oil-and-gas joint venture with Hoover Container Solutions.
"The sale will allow Brambles to focus on our strategic priorities and to pursue continued revenue growth within our core markets, while also reviewing additional opportunities in emerging markets," Chief Executive Graham Chipchase said.
The IFCO business generated revenue of almost US$1.1 billion and earnings before interest, tax, depreciation and amortization of US$248 million in the last financial year.
Last week, Brambles reported a 27% fall in its half-year profit to US$319.8 million as it grappled with rising transport and fuel costs, and after a one-off tax benefit a year ago wasn't repeated. The company has been seeking a turnaround after its share price was badly hit in the wake of a rare profit warning and hefty writedowns in the 2017 financial year.
On Monday, the company reiterated it was evaluating its dividend policy and would update investors with its full-year results, though it remained committed to maintaining a strong investment-grade credit rating and maintaining a progressive dividend policy for fiscal 2019.
Write to Robb M. Stewart at firstname.lastname@example.org
(END) Dow Jones Newswires
February 24, 2019 17:06 ET (22:06 GMT)
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