Brambles Limited has announced it has entered into an agreement to combine its Kegstar keg rental business with leading US beer keg solutions provider MicroStar.

Following the merger, the combined entity will be approximately 15 per cent owned by Brambles and 85 per cent owned by MicroStar’s current shareholders.

MicroStar’s major shareholder is Freeman Spogli, a private equity firm, which invests with management in growth-oriented, middle market companies in the consumer and distribution sectors.

Under the agreement, MicroStar will purchase Kegstar at an enterprise value of US$52.2m and issue scrip in MicroStar to Brambles as consideration.

The transaction is subject to foreign investment approval in Australia and New Zealand and, subject to obtaining that approval, is expected to complete in the first half of this calendar year.

As part of the transaction, Brambles will become a party to the existing MicroStar stockholders agreement, which covers key aspects of the combined businesses including governance and exit provisions.

Kegstar is a participant in the global beer keg rental sector, with operations across Australia, New Zealand, the UK, Ireland, the Netherlands and the USA.

MicroStar is a market leader in the USA, the world’s largest beer keg market, focusing on the same ‘pay-per-fill’ business model as Kegstar.

• The impact of the transaction will be disclosed as a subsequent event in the 31 December 2020 financial statements with the results of the Kegstar business being included within continuing operations.
• In the 30 June 2021 financial statements, the results of Kegstar in the current and prior year will be reclassified to discontinued operations. During the last full financial year ended 30 June 2020, Kegstar represented less than 1% of Group revenue.
• Brambles will deconsolidate the net assets of Kegstar on completion of the transaction and will recognise an equity investment in MicroStar at its fair value. The value of the investment in MicroStar is estimated to be close to the current carrying value of Kegstar, therefore it is not expected that there will be a material gain or loss on divestment of Kegstar.
• Brambles’ approximately 15% share in MicroStar will be accounted for within ‘Investments’ on the balance sheet going forward and will recognise its share of MicroStar’s profit or loss after tax on a single line item in the income statement within continuing operations.

This media release was circulated by Brambles Limited and was also sent to the Australian Securities Exchange Limited.

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