Brambles Buys Container Business IFCO

The world's largest pallet supplier, Brambles (ASX:BXB) is on track to buy German listed container business, IFCO Systems NV for €923 million ($A1.28 billion). Shares for Brambles jumped 5 percent on the takeover announcement.

Brambles said it would combine IFCO Systems with Brambles subsidiary, US-based CHEP's reuseable plastic container business to create a global concern with a broad base in Europe and America. ''IFCO is a natural fit with Brambles' existing RPC and pallet businesses and will allow us to continue to deliver on our strategy of diversifying our revenue base by product platform, geography and customer type,'' Brambles chief executive Tom Gorman said. RPCs contribute around 3 per cent of Brambles revenue, which will increase to 13 per cent of revenue if the acquisition goes ahead.

"This acquisition is accretive excluding synergies, but there are definitely a group of opportunities available," Gorman said. Brambles said the business would be 5 percent earnings-accretive on the year to June 2011.

IFCO Systems recorded annual sales of $US772 million in the financial year ended September and is expected to increase sales for Brambles by 16 per cent. Brambles will fund the acquisition with an equal mix of debt and equity.