Engineering group GKN today merged its industrial service business with Australian transport and logistics group, Brambles.

The deal, which does not include GKN's automotive or aerospace interests, will create a business worth close to £7 billion.

The enlarged Brambles, to be listed in both London and Sydney, will combine the Australian company's assets with GKN's share of the two firms' Chep pallet and Cleanaway joint ventures.

Under the merger agreement, GKN shareholders will have a 43 per cent share of the new company.

GKN's chief executive Sir CK Chow is leaving to head up the company along with finance director David Turner.

Executive director Marcus Beresford will take over as chief executive at GKN while Nigel Stein will become finance director.

GKN has been in talks with Brambles about the move since the turn of the year. Chairman Sir David Lees said the merger allowed GKN shareholders to participate directly in a "world-leading support services business".

He added: "Furthermore, GKN shareholders remain owners of a focused global engineering company with sales of more than £4 billion committed to continued growth."

Mr Beresford said the smaller GKN business, which will have a market value of around £2.5 billion, would seek growth both organically and through acquisition.

GKN has spent £1.2 billion on automotive or aerospace acquisitions over the last four years.