Grey Mountain buys pallet business from Australia's Brambles

CHEP Recycled provides a network of pallet management services in the US and Canada, supplying and recycling more than 90 million, primarily whitewood, pallets each year. It is part of the global CHEP business – one of the two main Brambles brands alongside IFCO, a supplier of reusable plastic crates – that has 12,500 employees across 50 countries.

CHEP Recycled operates 161 plants and pallet management sites. Of these, 73, together with approximately 2,400 employees, are included in the sale to Grey Mountain. The remaining 88 plants and sites, as well as 1,600 staff, will be retained by Brambles as part of the CHEP USA pooled pallets business, according to a filing.

Founded in Australia in 1945, CHEP provides pallet and container pooling services for customers involved in aerospace, automotive, chemical, consumer goods, fresh foods, and manufacturing. Pooling is seen as a way for companies to eliminate the fixed costs of buying and maintaining equipment by only paying rental fees for equipment based on frequency of use.

CHEP Americas generated $2.1 billion in revenue from continuing operations for the 2017 financial year, 40% of the Brambles total. This does not include the CHEP Recycled business, which was classified as held for sale at a carrying value of $80 million. Brambles took a $243.8 million non-cash impairment as a result of this reclassification.

This is not the company’s first divestment to private equity. In 2006, KKR formed Bis Industries through the acquisition of Brambles Industrial Services and Cleanaway Australia. The latter asset was sold to Transpacific Industries and a majority stake in the remaining business was acquired by creditors at the end of last year through a debt-for-equity restructuring.

Grey Mountain has around $700 million in assets under management and is currently deploying its third fund, which closed at $425 million in 2013. It makes equity investments of up to $75 million in North American businesses.

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