Brambles to float $2b Recall unit Pallet supplier Brambles is hiving off its underperforming data management business Recall into a separate listed company. Brambles shareholders will receive new shares in Recall Holdings proportionate to their existing Brambles shareholding, while retaining their existing Brambles shares, the company said this morning. Brambles will not retain any shareholding in Recall Holdings Limited following the demerger. Shares jumped 3.1 per cent to $9.36 in early trade, outperforming the benchmark, which rose 1.7 percent. "It's a good move," said Paul Xiradis, chief executive at Ausbil Dexia, which owns shares in Brambles. It has been talked about that this may be a likely outcome, so the market can focus on evaluating the pallet business overall. The demerger will enable Brambles to focus on the ongoing opportunities for growth from its core business, the supplier of wooden and plastic pellets said in an ASX filing. The IPO value for Recall would be around $2 billion, the sale price the company previously put, or perhaps a "touch lower," said Akshay Chopra, a fund manager at Karara Capital. Brambles in June 2012 cancelled the planned sale of Recall, after months of negotiations with potential buyers, with chairman Graham Kraehe explaining that offers - said at the time to be around $2 billion - were too low. Recall's new chairman Ian Blackburne is also the chairman of gaming company Aristocrat Leisure and a director of New York Stock Exchange-listed marine energy transport firm Teekay Corporation. Brambles offered new shares to existing shareholders that could raise up to $448 million, with the proceeds to make up for the failure to sell Recall. In the six months to December 31 last year, Recall's revenue fell by 5 per cent to $US607 million, and represented only 16 per cent of Brambles's revenue. But Brambles chief executive Tom Gorman defended the subsidiary company's performance. ""Recall is a very solid business with a strong financial profile that has consistently created value for Brambles shareholders,"" he said in a statement today. ""It has delivered stable, recurring sales revenue despite challenging macro-economic conditions, and positive trends for cash flow generation, operating margins and return on capital over recent years."" Shareholders will be given a scheme book in October containing a demerger recommendation from the Brambles board, along with the demerger timetable and a profile of both Recall Holdings and Brambles after the change. Recall generated revenue of $US845 million in the 2012 financial year and underlying profit of $US174 million, Brambles said in a statement, adding that the unit was forecast to make an underlying profit of $US138 million to $US142 million this year. Brambles continues to expect underlying profit, including the contribution of Recall, of between $US1.03 billion and $US1.06 billion ($1.12 billion and $1.15 billion) in the year to June 30, based on June 30, 2012 exchange rates when the Australian dollar bought 102 US cents. AAP, Reuters