Demerger / dual-listed merger

Abstract

GKN plc has several divisions that carry on distinct lines of business. For many years, one division - the industrial services business - has largely been carried on in joint venture with Brambles Industries Limited. In early 2001 it was decided that the industrial services business would best be developed and shareholder value maximized by merging GKN's industrial services business with Brambles. This merger was not straightforward, since it involved first demerging GKN's industrial services business and then combining it with Brambles in a manner that was tax-neutral for both companies and their shareholders. How this deal was achieved is explained.