Kohlberg Kravis Roberts said on Monday it had bought the Australian waste management and industrial services businesses of Brambles Industries for A$1.83bn ($1.35bn) in cash, a record for an Australian private equity transaction.
Anglo-Australian logistics operator Brambles said it expected to complete the sale to KKR, one of the world’s biggest buyout firms, by early July, 2006, and report a pre-tax profit on the transaction of about A$900m.
Advised by UBS, Brambles had announced last November that it would sell its Australian and New Zealand Cleanaway waste management arm and its material handling and logistics unit, Industrial Services, to focus on its profitable pallet and document management businesses.
KKR said the acquisition was its first investment in Australia. “These are world-class businesses that we hope to take to the next level,” KKR director Justin Reizes said in a statement.
Australia’s private equity market has accelerated in recent months as buyout firms have sought to take advantage of the country’s 15 continuous years of economic growth and near record share prices.
In March, a consortium including Texas Pacific Group (TPG), the US buyout firm, and its Asian affiliate, Newbridge Capital, acquired 61 department stores owned by Coles Myer for A$1.4bn.
Also highlighting the buoyant M&A market on Monday, Babcock and Brown Infrastructure, a fund run by Australia’s second-biggest investment bank, and Australian Pipeline Trust, the nation’s biggest pipeline owner, announced a joint A$372m bid for GasNet Australia, the largest pipeline operator in the state of Victoria.
The Brambles deal is KKR’s third major investment in Asia in the past 12 months. In April, it agreed to buy the Indian software business of Singapore’s Flextronics International for about US$900m – India’s biggest leveraged buyout to date.
Last year it paid $2.66bn for the semiconductor unit of Agilent Technologies, now known as Avago Technologies, which operates primarily in Singapore.
Brambles chief executive David Turner said the bidding process, which closed on Friday, had attracted “very strong interest” from trade and private equity buyers.
KKR beat bids from rival buy-out firm CVC Asia Pacific, a Citigroup affiliate, Sydney-based private equity firm Ironbridge Capital and Brisbane-based Transpacific Industries Group, which earlier this year bought New Zealand’s largest waste collector, Waste Management NZ, for NZ$880m.
Mr Turner said the combined Brambles businesses had sales of A$863m and an operating profit of A$98m for the year ended June, 2005.
Cleanaway head Chris Berkefeld will continue to manage the waste management operator, which handles almost 2m garbage collections in Australia and New Zealand each week.
The Sydney-based Brambles, which is the world’s biggest supplier of pallets used to move and store goods, said its total proceeds from divestments to date, including Cleanaway Germany and Brambles Industrial Services Northern Hemisphere, was US$2.44bn.
The group is conducting a separate sales process for its UK-based Cleanaway business.