Acquisition would make Japan Post one of the largest global 3PLs.
Government-owned Japan Post Holdings moved Wednesday to become a significant, global third-party logistics provider, offering A$6.5 billion (U.S. $5.1 billion) offer to acquire Toll Holdings, Australia’s largest freight transportation company.
The cash payment of A$9.04 (US$7.05) per share represents a 49 percent premium on Toll’s last closing price.
Japan Post said Toll would be run as a division of Japan Post and will retain the Toll name. Toll’s CEO Brian Kruger and the rest of the management team will remain with the company.
This is the second time this week a Japanese logistics company has made a major acquisition. Kintetsu World Express on Tuesday bought Singapore-based APL Logistics for $1.2 billion.
Japan Post, which also offers banking and insurance services, plans an initial public offering within the next year. A previous privatization plan was scuttled in 2010. The postal service cut the deal to increase its value ahead of the offering by diversifying beyond its domestic market, especially into the fast-growing Asia market where Toll has a strong foothold. Japan’s postal market has been shrinking in recent years due to population decline and increased Internet communication.
The acquisition follows the launch of an international parcel delivery service in October by Japan Post through a partnership with France’s GeoPost and Hong Kong’s Lenton Group.
Toll is the largest independent logistics provider in the region, engaging in freight forwarding, contract logistics, express delivery, intermodal rail and trucking. It even operates its own fleet of tugs, barges and other shallow-draft vessels in Asia. The company had revenue of US$6.9 billion and turned a profit of US$228.5 million in 2014.
The deal would make Japan Post the fifth largest logistics company in terms of revenue, pitting it in competition with the likes of CEVA Logistics, DHL, UPS, and FedEx. The company said it would use Toll’s expertise to make further acquisitions in Asia, Europe and North America.
“Toll has become an iconic Australian transport and logistics business with significant operations in Asia. We will be complementary to Japan Post, and closely aligned in our target markets. Combined we will have an expansive geographical footprint with Toll providing expertise in the global logistics and transport markets. Japan Post will bring extra capability, financial strength and significant scale to accelerate growth. Together we will offer an enhanced value proposition while delivering innovative, efficient and cost effective solutions to our customers,” Kruger said in a statement.
Toll’s interim results for the first half of fiscal year 2015, released Thursday, showed a 22 percent decline in net profit due to what the company said were sluggish economic conditions in Australia, as well as divestments and portfolio changes. Toll is in the midst of an internal restructure designed to trim costs, as well as an overhaul of information technology systems designed to improve efficiency and cost.
The Japan Post transaction is expected to close in June, contingent on approval by both regulatory parties and Toll shareholders at a meeting in May.
Japan Post to buy Toll Holdings for $5.1 billion
