For all you special situation investors out there i just thought i'd share with you all an interesting opportunity with regards to the prospective Brambles spinoff of its Recall business. Managed from New York, Brambles intends to sell Recall for a rumoured price of between $2.7m and $2.9 m citing Recalls "distraction from their main business", and their intention to see further upside in the recall sp.
Fundamentally, the stock isn't exactly a 'bargain buy', with price/book of 4.29 and a p/e of approx 21. Nonetheless, ROE is quite high (23.66%), ROA of 8.71% and the company has a reasonable profit margin. That said, i'm sure i don't have to remind you all how attractive spinoffs can be. If the deal goes ahead and shares in the spinoff are distributed to Brambles investors, there is the possibility that they could be subject to indiscriminate selling by parent investors. This could be due to regulatory reasons, or the holders of the parent stock may not want to own the interest in the company. This of course will push the sp down to bargain levels - an attractive prospect if you were bullish on Recall!!
BXB Price at posting:
$8.65 Sentiment: Buy Disclosure: Not Held
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