While it’s good to have heaps of interested parties, it’s created a headache for Japan Post, Toll management and others involved in the sale. Dealing with all the parties is a logistical nightmare, even for a logistics specialist.
Big biters
Bidders for the whole lot include Australia’s Anchorage Capital Group and Allegro Funds – who are probably the country’s best-known turnaround investors. The messier the situation, the more these two get interested.
Both are understood to be keen to refine Toll’s business and its portfolio, and clean it up for a new owner. Both are working alone.
Melbourne buyout firm BGH Capital and Sydney’s Pacific Equity Partners – purveyors of the biggest and second-biggest Australian buyout funds – are understood to have dropped out of the auction. Carlyle’s special situations group, Carlyle Strategic Partners, is another that is no longer involved, despite taking an early interest.
It is understood Toll founder and former long-time MD Paul Little is hanging around the hoop, as is global private equity Platinum Equity Partners, which has a strong track record in the logistics sector offshore. They’re seen as backmarkers at this stage.
Sources said Japan Post’s preference was to sell the business in one line if there was a reasonable bid. It would then be up to the new owner to decide which bits of the group fit into the long-term plans.
Another – less preferred – option could be to sell the high-performing assets including Tasmania/shipping and NZ, intermodal, and couriers/palletised freight, and use the proceeds to shut down what’s left.
Second prize
Bankers reckon NZ is the most likely division to be hived off, should the business be broken up. It’s said to be run fairly separately from the rest and could operate profitably away from the wider Toll mothership. It recorded about $260 million revenue last year, according to information sent to potential buyers earlier in the process.
Interested parties for the NZ business are understood to include state-owned KiwiRail, big domestic players Mainfreight and Freightways and NZ’s Pencarrow Private Equity, among others. It is not known which parties were tapped for the second stage of talks.
As for Tasmania/shipping, which is a $460 million a year business and is the biggest freight-forwarder into and out of Tasmania, it is believed to have attracted interest from shipping companies DP World and NZ’s Strait Shipping (owned by CPE Capital and Macquarie), global logistics giant DHL and Singapore Post.
Sources said bigwigs Aurizon and Pacific National have had a look at Toll’s intermodal unit business, along with fellow Australian Qube, Brookfield (which owns Patrick Terminals alongside Qube), Infrastructure Capital Group and Macquarie’s MIRA, which owns One Rail.
Meanwhile, bankers reckon Freightways, global giant FedEx Express and TNT, Sendle and SingPost were interested in the couriers and palletised freight arms.
Like we said, it’s a moving feast, and not your standard asset auction.
The good news for all involved is that Japan Post wants a deal – or at least to be in sight of a deal – by its financial year-end on March 31. It ensures two months’ of late nights ahead for Toll’s camp and the contenders, but at least there is a finish line in sight.
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