(Reuters) - Australia's Brambles Ltd said on Monday it would sell its plastic containers business to Abu Dhabi's wealth fund and a private-equity firm for an enterprise value of $2.51 billion, earmarking proceeds for a buyback and sending its stock higher.
From the $2.36 billion that the company expects in proceeds, it plans to return up to $1.95 billion to shareholders, Brambles said in a statement. Its shares jumped as much as 8.1 percent, before settling 2.8 percent higher at a two-year high, while the broader market rose 0.3 percent.
Brambles entered a binding agreement to sell its IFCO business to Germany's Triton and Luxinva, a wholly-owned subsidiary of the Abu Dhabi Investment Authority, and expects to complete the deal in the second quarter of 2019.
The pallets and container firm said its buyback would run up to $1.65 billion while $300 million of the proceeds will be returned to shareholders in cash, and the remaining amount will be used to repay the company's debt.
The firm is well-positioned in a growing market, the buyers said in a joint statement issued in Abu Dhabi.
The agreement comes after Brambles in August said it planned to demerge its IFCO business. It added that the unit generated revenue of $1.10 billion in the 2018 financial year and an underlying profit of $133 million.
Brambles in 2010 purchased then Germany-listed IFCO, maker of reusable plastic containers for transporting fresh produce, for about $1.3 billion.
Brambles reaffirmed its current progressive dividend policy for its full year dividend in 2019.
(Reporting by Nikhil Kurian Nainan in Bengaluru and Tom Westbrook in Sydney; Editing by Cynthia Osterman and Shreejay Sinha)
