Toll in $6.5 billion foreign takeover from Japan Post

TRANSPORT and logistics firm Toll has received a $6.5 billion takeover offer from Japan Post.

TRANSPORT and logistics firm Toll is the target of a $6.5 billion takeover offer from Japan Post.

Shares in Toll Holdings have surged after the news broke.

Shares in Toll were 47.5 per cent, or $2.89 higher, at $8.97 1100 AEDT.

Japan Post has offered $9.04 for each Toll share, which is 49 per cent above Toll’s closing price on Tuesday of $6.08.

Toll’s board of directors has unanimously recommended shareholders accept the offer.

The move came as Toll announced a 22 per cent slide in its first half profit to $134.3 million because of challenging economic conditions, especially the slowdown in the resources sector. Japan Post plans to use Toll to help grow its international operations.

It said it was looking to expand overseas to offset a decline in demand for postal services in Japan.

“Japan Post will position Toll as a platform for cultivating global business, leveraging that company’s expertise to expand Japan Post’s global logistics operations and revenues,” the company said.

Under the proposal, Toll group managing director Brian Kruger will remain with the business.

The deal is subject to approval from the Australian government and Toll shareholders.

Kimber Capital head of research Greg Fraser said it was a good offer for Toll shareholders.

“I don’t think anyone will say no to it. It’s a huge premium,” he said.

Mr Fraser said many analysts in Australia considered Toll’s financial performance to be fairly ordinary, prompting one to wonder what Japan Post saw in Toll that local investors did not. Japan Post may believe that having a presence in this region, via Toll, offers significant benefits.

Happy fellows.

Mr Fraser said not all of Toll’s many acquisitions had worked out well. The company was involved in various transport and logistics areas and, being a global company, was complex.

He didn’t expect another suitor to appear.

The future of 40,000 workers at transport group Toll Holdings is uncertain following the takeover bid, the Transport Workers Union says.

TWU says workers have been kept in the dark.

“Nowhere in the statement from Toll Holdings is there any mention of what the takeover would mean for workers,” a statement from the transport union said.

“We do note that the move will allow Toll management to keep their jobs.” TWU assistant national secretary Michael Kaine said the union would be seeking assurances that Australian jobs are safe.

“We expect that management will honour that loyalty and hard work by assuring staff that their jobs are safe in this takeover,” TWU assistant national secretary Michael Kaine said.

“We are urgently seeking a meeting with management to discuss the terms and conditions of this takeover and what the implication of it are for our 9,000 members at Toll.”

Meanwhile, Toll said challenging domestic economic conditions had put pressure on margins in some businesses, while weak commodity prices and weak business and consumer confidence had slowed general activity.

Volumes were lower in the resources and retail sectors, and the wind-down of LNG (liquefied natural gas) construction projects also had an impact.

Plus, contracts completed or lost in the prior period included the Australian Defence Force and Coles Far North Queensland. Mr Kruger said Toll didn’t expect the domestic economy to pick up anytime soon but that the company’s aggressive cost-cutting would help boost future earnings still expects to deliver higher underlying operating earnings for the full year.

“We have many cost-out programs that will support earnings, and we also expect to drive improved returns from the capital we have been investing in the business to provide a strong platform for future growth,” Mr Kruger said.