32 WESTERN PALLET
CHEP China and Loscam China to Combine
Brambles Limited has announced that it has entered into an agreement to combine the pallet and automotive pooling operations of CHEP China with Loscam (Greater China) Holdings Limited. Under the agreement, CHEP China will be sold to Loscam Greater China for US$132.2 million, with Loscam Greater China issuing shares to Brambles as consideration.
The combined entity will be 20% owned by Brambles and 80% by Loscam (Greater China) Co., Limited, which is the Greater China arm of Loscam Group, whose beneficial owners are Sinotrans Limited and two private equity firms, Trustar Capital (formerly known as CITIC Capital Partners) and FountainVest Partners.
Completion of the proposed transaction, which is subject only to certain regulatory approvals, is expected to occur by the end of the first quarter of calendar year 2023.
Key points of proposed transaction
• The combination of Loscam Greater China and CHEP China will result in the largest pallet and automotive container pooler in Greater China, with a combined pool of over 20 million pallets and one million automotive containers and other crates, together with a network of service centers.
• With a significantly stronger position in Greater China, the combined business is expected to benefit from greater scale and customer reach, providing increased capability to serve customers, accelerate growth and enhance the value of pallet and automotive container pooling in Greater China, while creating synergy opportunities and capital efficiencies for Brambles.
• The combined business will operate under the leadership of Loscam Greater China’s Chief Executive, Tai Ching Nam, with Nancy Qian, currently the President of CHEP China being appointed Deputy CEO. Brambles will have board representation, with critical decisions requiring the approval of both shareholders.
• Completion of the proposed transaction is subject to regulatory approval from the relevant government authority of the People’s Republic of China in Shanghai.
• CHEP and Loscam’s respective operations in Australia, New Zealand and all other Asian markets will remain independent.
"Today’s announcement represents an important strategic milestone for Brambles," said Graham Chipchase, Brambles CEO, commenting on the deal. In partnering with Loscam Greater China, we will expand our footprint, invest together to grow our network of operations and reduce duplication, building a truly national pallet pool. With approximately 1% of the 1.6 billion pallets in China pooled, there is an exceptional opportunity for growth which our jointly owned business can deliver to new and existing customers in this large and fastgrowing market. “Importantly, the proposed transaction also facilitates near-term capital efficiency for Brambles. We look forward to combining our operations with Loscam Greater China and expediting the conversion of the Chinese pallet market to pooling, as supply chains in the region automate and seek to become more efficient and sustainable.” Loscam Greater China’s Chief Executive, Tai Ching Nam added: “This is an exciting and critical development for Loscam and CHEP. While there is no impact on the independence of Loscam’s other operations, combining the scale and expertise of our respective organisations across Greater China strengthens our position for future growth in this attractive market.”