GKN, Brambles close to $8.5bn deal

GKN's businesses include the Westland helicopter line

By CNN's Ian McMinn

SYDNEY, Australia (CNN) -- British engineering group GKN and Australian transport and logistics group Brambles will announce a $8.5 billion merger of some of their interests later this week.

Brambles told CNN late Tuesday that an announcement was not expected until Thursday, April 18 in Sydney.

That announcement is likely to unveil a new corporate structure chaired by Brambles chairman Don Argus and run by GKN chief executive Sir C.K. Chow.

Analysts believe Brambles will own 55 percent of the new industrial services company, which will be domiciled in Australia and jointly listed on the Australian and UK stock exchanges

It is believed the deal is modeled on the proposed BHP-Billiton merger, whose global energy resources are to be headquartered in Australia.

After the merger, GKN and Brambles will continue to operate stand-alone businesses.

GKN will still run its car parts, aerospace and defense vehicle manufacturing business while Brambles is expected to streamline its business, eventually selling its equipment rental division.

GKN share concerns

According to the Financial Times, GKN's shares have been hit by concerns that its engineering business would struggle to survive independently, once hived off from the industrial services operations.

The engineering business includes Westland helicopters and vehicles parts, generating sales revenue of $5.7 billion in 40 countries.

On January 15 Brambles management wrote to its 30,000 shareholders announcing that preliminary discussions with GKN were underway concerning "a nil premium merger" of some industrial services activities.

The companies have for many years operated international joint ventures in pallet pooling and industrial waste.

Since June 2000 Brambles, whose 19,000 employees work in 30 countries, has sold close to $100 million worth of assets, with significantly more to come.

Brambles Global Industrial Services
GKN Plc
Westland Helicopters

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