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Japan Post makes US$5.07b bid for Australia's Toll
[SYDNEY] Australia's Toll Holdings on Wednesday recommended shareholders accept a US$5.07 billion takeover offer from Japan Post to create one of the world's largest logistics companies.
The Japanese behemoth, a state-owned global postal and logistics player, unexpectedly offered A$9.04 a share for Toll, a 49 per cent premium to the company's closing price on Tuesday, valuing it at A$6.49 billion (S$6.86 billion).
Few had been anticipating an acquisition.
Under the proposal, the Melbourne-based transport logistics giant will be run as a division within Japan Post and retain the Toll name, with the company's chief executive Brian Kruger reporting to his counterpart Toru Takahashi.
"We are delighted to recommend to shareholders that Toll joins with Japan Post," said chairman Ray Horsburgh.
"Japan Post is one of the world's leading postal and logistics companies and Toll is the largest independent logistics group in the Asia-Pacific.
"Together, this will be a very powerful combination and one of the world's top five logistics companies." A shareholder meeting to vote on the offer will be held in May, with the deal also requiring approval from Australian Treasurer Joe Hockey under the nation's foreign investment laws.
Toll has a global network spanning road, air, sea, and rail routes with significant operations in Asia, and Mr Takahashi said it was a perfect fit for Japan Post as it looks to expand its global footprint.
"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," he said.
"In partnership with Toll we are starting a new chapter of looking outward and becoming a leading global player."
The government of former Prime Minister Junichiro Koizumi split the state-owned Japan Post into four units in 2007, to handle deliveries, savings, insurance and counter services at each of its post offices.
The government retained full ownership of the group at first, with plans for the bank and insurance units to go fully private by 2017.
But the plan was stalled after the long-ruling Liberal Democratic Party lost power to the Democratic Party of Japan between 2009 to 2012.
After returning to power in 2012, the current LDP-led government resumed the privatisation project with Japan Post in December confirming it will list its shares in Tokyo this year.
IG Markets strategist Stan Shamu said the deal was a good one for Toll.
"Japanese companies hold an enormous amount of cash on their balance sheets and, given the two-way trade between Australia and Japan, this is a solid move," he said.
Shamu's IG Markets colleague Chris Weston added that "no-one was expecting a bid and if they were they weren't expecting that sort of magnitude".
Toll, which was founded in 1888 as a horse-and-cart coal haulage business in the Australian port town of Newcastle, said the merger would enhance its service to existing and new customers.
"The proposed combination is a reflection of the strategic value of our business and our strong footprint throughout the Asia-Pacific region," said Mr Kruger.
"The great Toll culture built on safety and operational excellence will work well alongside Japan Post's established values. I am delighted to have been invited to lead this powerful new division of Japan Post and look forward to working with the rest of the group."