CVC Capital walks away from bid for pallet-maker Brambles

CVC Capital Partners has walked away from a potential bid for Brambles, the Australian provider of pallets and crates for transporting goods around the world.

The private-equity firm told Brambles it “will not be putting forward a proposal nor seeking to conduct detailed due diligence at this time due to the current external market volatility,” Brambles said in a statement Tuesday, confirming an earlier Bloomberg News story.

Engagement between the two camps ended early Tuesday, Brambles said, with the company planning to continue its own transformation plan.

The rise in the Brambles share price and overall market uncertainty amid the war in Ukraine have made it harder for CVC to seal a deal at an attractive price, Bloomberg News earlier reported.

CVC could still renew its pursuit of Brambles at a later date, according to people familiar with the matter, who asked not to be identified discussing confidential information.

Brambles said Monday it had held early discussions with CVC after receiving an unsolicited takeover proposal. Shares of the company jumped as much as 13 per cent on Monday, a record intraday gain.

They were up 11 per cent at the close in Sydney, giving Brambles a market value of about $16.7 billion.

Turbulent past

A deal would have marked a splashy return to Australian dealmaking for CVC under Brett Sutton, a veteran of Affinity Equity Partners who joined the firm as country chairman last year with a mandate to build out its local operations.

He’s already started bringing on some junior talent, hiring Hugh French from Carlyle Group Inc. earlier this year to be an investment director in its Sydney office.

Some of CVC’s past exploits in Australia haven’t gone well.

It acquired broadcaster Nine Entertainment Co. from local billionaire James Packer through a series of transactions starting in 2006.

It ended up losing most of its multibillion-dollar investment when it handed control of Nine to creditors, a move that marked the biggest failure of a Australian leveraged buyout in over a decade.

Another CVC deal in Australia was the takeover of MFS Ltd.’s Stella travel and resorts unit in 2008.

It listed the hotel operator, by then renamed Mantra Group Ltd., in 2014 at a valuation lower than what it initially paid.

The business was eventually acquired by larger French rival Accor SA.

Speculation first emerged earlier this year that Brambles, which has a global logistics footprint, could be a takeover target for private equity firms.

Any deal would add to a string of acquisitions in Australia even as transactions values globally have slumped.

Australia has about $64b of announced deals so far this year, according to data compiled by Bloomberg.

A consortium led by KKR & Co. last month lodged a non-binding offer for Ramsay Health Care Ltd. for $20.1b in what could be Australia’s third-biggest deal in history.

Bloomberg