Brambles Share Price Rises after Joint Venture Sell-Off

Brambles Limited [ASX:BXB] share price is currently trading at $9.72, up from $9.55 yesterday.

Last Thursday, Brambles announced their decision to sell 50% interest of its Hoover Ferguson Group, to its venture partner First Reserve.

In late 2016 Brambles created the Hoover Ferguson Group, which allowed the company to merge its oil and gas container businesses with them.

Brambles’ CEO Graham Chipchase said the logistics operations in the oil and gas industry were no longer a core business for the company and offered limited opportunity for strong returns, as reported by Yahoo Finance.

How will Brambles profit from the sell-off?

The joint venture will be transferred for nominal consideration purposes to First Reserve.

As a result, a non-cash write down of the total investment will take place, valued at a total of almost US$5 million.

Brambles will be repaid $150 million in the form of a subordinate’s shareholder loan by Hoover Ferguson Group.

These funds will be used to pay off lingering debt in order to properly fund Brambles’ projects across other divisions.

Brambles will still receive an extra $37 million from First Reserve, purposed for consideration for equal ownership rights in Hoover Ferguson Group, going all the way back in 2016.

This will continue to generate interest until the year 2026.

Hoover isn’t the only venture Brambles has decided to sell off. Brambles also sold its North American pallet recycling company, CHEP Recycled Pallet Solutions not too long ago.

Grey Mountain Partners were the ones who bought out CHEP Recycled from Brambles as the transaction was settled sometime in mid-February.

A total of 73 facilities as well as 2,400 employees were covered in the sale. However, Brambles still owns other service centres of CHEP Recycled which holds about 1,600 employees.

Although owned by Brambles, it currently runs under the CHEP name in the North American region.

Regards,

Ryan Dinse,
For Markets & Money

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Ryan Dinse is an analyst at Markets and Money. He has two decades of experience in financial planning, equity analysis and credit markets. Ryan combines fundamental, technical and economic analysis to identify and invest in good ideas at the appropriate stage of the economic cycle. He has a strong interest in technology, economic history and disruptive business models. His focus at the moment is as lead analyst on two of our most recent and innovative investor services, Crash Market Investor and Sam Volkering’s Secret Crypto Network. He will write about the exciting opportunities for investors to benefit from significant changes in world markets. He is a member of Fintech Australia, a former member of the Digital Currency Council, and is a fully accredited financial adviser.


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