ANALYSTS expect global pallet company Brambles to bounce back after failing to sell its document management business, flagging a challenging short-term outlook and announcing the departure of its well-respected chief financial officer.
Brambles said yesterday it had failed to find an offer of "appropriate value or certainty" for the Recall business, which was put up for grabs 10 months ago and estimated to be worth $2 billion.
It is believed the board had rejected approaches from two overseas private-equity firms, Apollo and Birch Hill, opting instead to put its cap out for almost $450 million.
The company is now offering investors one new share for every 20 shares held. The offer equivalent to 5 per cent of issued capital is priced at $6.05 a share, an 11 per cent discount to its last-traded price of $6.79. It is also well below analysts' consensus of $7.88.
Brambles entered a trading halt yesterday, thus avoiding another shocking day for the market, in which the benchmark S&P/ASX 200 slumped 1.9 per cent to close below 4000 points. The company will resume trading on Thursday.
And although Brambles reaffirmed its 2012 underlying profit forecast, it said it did not see a short-term end to the challenging trading conditions afflicting parts of its business. Nomura analyst David Fraser said the decision to hold on Recall was not surprising given troubled global debt markets. "Recall is a good business, so there's no point selling it off at a fire-sale price."
Another analyst said Recall still had an unofficial "For Sale" sign around it, and would likely be quickly sold off when conditions improved.
Others have noted that the information management business is a clunky fit for a pallets and logistics company, despite its reasonable performance. The business was tipped yesterday to grow by between 19 and 29 per cent, with underlying earnings of between $US180 million ($A185 million) and $US195 million.
Brambles also announced the retirement of CFO Greg Hayes, who will step down from the board in October but leave the company in March next year. The company said it was "already well advanced" in finding a successor.
The aborted sales process will cost Brambles $25 million.
The equity raising will help pay for the purchase of German pallet and logistics company IFCO Systems last year for $1.3 billion.