We’ve ummed and ahhed about the valuation of Brambles recently, on 14 May 07 (Hold – $13.62) and 27 Jul 07 (Hold – $10.79), but there’s been less dithering from Toll Holdings and its recent spin-off, Asciano, which have bought stakes of 0.5% and 1.8% respectively. What they seem less sure about, at least in public, is what to do next.

Toll and Asciano are acting independently of each other (as required by undertakings given as part of the Toll takeover of Patrick and the subsequent demerger of Asciano) and there’s the possibility of a battle breaking out for control of Brambles. We won’t be holding our breath, though. For such a large deal, both companies would need a lot of support from the market, but it’s hard to see why Brambles would be worth more to either of them than it is on its own.

The interest from Toll and Asciano might also flush out some other bidders, debt market turmoil notwithstanding, but one way or another it doesn’t make a lot of difference from our point of view. The excitement has only pushed the stock further away from buy territory, but it remains a very comfortable HOLD for existing shareholders.

James Carlisle