Apollo joins Carlyle in $2b race for Brambles Recall unit

Recall, which was put on the block by the world's largest pallet maker and supplier last spring, is said to have shortlisted all four firms as potential purchasers of the business. Final bids are scheduled for mid-February.

Brambles is thought to have valued its subsidiary at $2.2 billion. "I don't think they would want to sell it for less than $2 billion," Russell Shaw, a senior analyst at Macquarie, told The Australian. "It's not a fire sale by any means because they can afford to hold on to it if they don't get the right price. The company is making good profit and there is good earnings growth this year."

The sale has been targeted at private equity firms, partly because of their access to debt to support the deal. Several strategic buyers are also said to be interested in the unit. The Carlyle Group was reported as being shortlisted as a potential suitor for Recall earlier this month, causing the vendor's share price to fall 1.1% to A$7.2 ($7.2) at the news.

Brambles announced plans to sell Recall last April in a bid to pay off its debts. UBS analyst Simon Mitchell said at the time: "We believe private equity could afford to pay the most for Recall, which we estimate at $1.7 billion, in order to generate a 25% internal rate of return (IRR). This could rise to $1.9 billion on a thinner 20% IRR."

Brambles' net profit for the year to June 30, 2011 was $475 million, compared to $449 million the previous year. Recall represents 15% of its parent company's EBITDA, and its turnover and profits grew by 6% and 14% to $387.4 million and $196.6 million respectively in the first half of 2011.

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• Topics
• Australasia
• Buyouts
• Industrials
• Apollo Global Management
• The Carlyle Group
• Australia
• buyout