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UPDATE 1-Australia's Brambles to float $2 bln data management unit
July 2, 2013 / 1:16 AM / 4 years ago

UPDATE 1-Australia's Brambles to float $2 bln data management unit

* Brambles plans to demerge $2 bln Recall unit

* Brambles not retaining any holding in Recall

* Spin-off comes a year after scrapping the sale of Recall

SYDNEY, July 2 (Reuters) - Australian pellet supplier Brambles Ltd has revived a plan to exit its $2 billion data management business, saying it will spin off the unit and list it on the Australian Securities Exchange (ASX).

The proposal to spin off the unit, which Brambles expects to post a profit decline, comes at a time when several Asia-Pacific initial public offerings have been pulled or cut. Financial markets are again roiled by concerns over slower Chinese growth and U.S. stimulus reduction plans.

Still, Australia’s S&P/ASX 200 Index has gained 20 percent since Brambles scrapped its previous plan to sell the business, Recall Holdings, in June 2012.

Shareholders will vote on the plan in December, with a listing expected soon after, Brambles said on Tuesday.

Brambles shares jumped 3.1 percent to A$9.36 by 0014 GMT, outperforming the benchmark, which rose 1.7 percent.

“It’s a good move,” said Paul Xiradis, chief executive at Ausbil Dexia, which owns shares in Brambles. “It has been talked about that this may be a likely outcome, so the market can focus on evaluating the pallet business overall.”

Brambles said Recall may make an underlying profit of $138 million to $142 million this year, compared with $174 million in the previous year.

The demerger will enable Brambles to focus on the ongoing opportunities for growth from its core business, the supplier of wooden and plastic pellets said in an ASX filing.

Brambles will not retain any shareholding in Recall following the demerger.

The IPO value for Recall would be around $2 billion, the sale price the company previously put, or perhaps a “touch lower,” said Akshay Chopra, a fund manager at Karara Capital.

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