‘Hard to beat’: Toll can’t believe its luck as Japan Post lobs a very sweet offer

Not so Little: Meet the $340m winner in Japan Post’s takeover of Toll
Nanjing Night Net

Serendipity best describes what Toll Holdings shareholders experienced  on Wednesday morning.

Having braced themselves for a poor profit performance and a likely fall in the company’s share price, shareholders in the logistics business must be delighted that Japan Post has pitched a takeover offer that is generous to say the least.

Thus it’s hardly surprising that Toll directors unanimously and heartily endorsed the $9.04 offer, which represented a massive 53 per cent (yes 53 per cent) premium to the pre-offer three-month average trading price.

Making the offer even sweeter, shareholders get their hands on the company’s 13¢ dividend.

Toll chairman Ray Horsburgh described the offer price, which values the company’s equity at $6.5 billion, as “compelling value”.

And while the board remains open to any competing offers, Horsburgh argued it was “such a compelling offer it would be hard for anyone to beat”.

It appears the $85 billion government-owned postal business is heading into the final stages of an initial public offering (IPO) and wants another big business to add to its suite of assets, presumably to offer some earnings upside.

Toll is the lucky product of that Japanese search.

The lure of Toll appears to be its global reach and in particular its Asian network. This network, according to the half year profit announcement on Wednesday, contained its most (almost only) profitable divisions.

Toll Global Forwarding operations improved profit from $13.9 million to $20 million in the six months to December, while Toll Global Logistics notched up an earnings improvement of 11 per cent to around $61 million.

Toll’s push into Asia was unpopular with investors at the time, but was part of the entrepreneurial vision of its previous chief executive (and modern-day founder) Paul Little.

Horsburgh spoke to Little on Wednesday morning with formal notification of the offer (although presumably Little – a 5 per cent shareholder in Toll, which is now worth $340 million – was well aware of negotiations that began last month.  According to Horsburgh, Little had mixed views, but said it was fantastic for shareholders. “Overall he is pretty happy,” says the Toll chairman.

President and CEO of Japan Post Toru Takahashi said: “We believe the combination of Japan Post and Toll will be a transformational transaction for both our companies and we are very pleased we have been able to reach agreement.

“In partnership with Toll we are starting a new chapter of looking outward and becoming a leading global player.”

Where Japan Post has remained focused on its traditional letters business and has not strayed far geographically, it is now using Toll as a launchpad to expand its operations further in Asia, Europe and North America – taking advantage of its skill set, its merger and acquisitions expertise and its contracts and infrastructure.

This story Administrator ready to work first appeared on Nanjing Night Net.