Japan Post buys Australian logistics giant Toll for $5.1 bn

Japan's state-owned conglomerate Japan Post Holdings Co Ltd has struck a deal to acquire Asia-Pacific's largest freight and logistics company Toll Holdings Ltd, in an all-cash transaction, aiming to expand its global footprint in logistics.

Japan Post has offered A$9.04 per share of Toll, which represents a hefty 49-per cent premium to Toll's closing price on Tuesday on the Australian Securities Exchange (ASX) and values the logistics giant at approximately A$6.5 billion ($5.1 billion).

In addition, Toll shareholders will be entitled to a $0.13 per share interim dividend.

Further to the news, shares in Toll skyrocketed almost 50 per cent before finally settling at A$8.95, marginally below Japan Post's offer price.

Melbourne-based Toll operates a global transportation network comprising road, rail, sea, air, and warehousing in 55 countries with significant presence in the Asia-Pacific region.

Toll, which celebrated its 125 years of operation in 2013, had a humble beginning as a coal haulage business with horses and cart in New Castle, Australia. Currently, the group's annual revenue is around A$8.8 billion and it has over 45,000 employees.

Tokyo-based Japan Post is a financial behemoth providing postal, banking, insurance, and transportation services with assets of about $115 billion. It was split in 2007 into four units to handle deliveries, savings, insurance, and counter services in its post offices.

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

Japan Post expects the acquisition will help it to step up further mergers and acquisitions in Asia, Europe and North America.

''In partnership with Toll we are starting a new chapter of looking outward and becoming a leading global player,'' Takahashi said.

Toll chairman Ray Horsburgh commented: ''Japan Post is one of the world's leading postal and logistics companies and Toll is the largest independent logistics group in Asia-Pacific. Together this will be a very powerful combination and one of the world's top five logistics companies.''

Toll's board has termed the offer as a ''compelling transaction'' and recommended it to its shareholders.

On completion of the deal, Toll will retain its name and function as a division under Japan Post.

Toll management will remain in place with its CEO Brian Kruger reporting to Japan Post's Takahashi.

''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,'' Kruger said.

The transaction needs the approval of Toll's shareholders as well as the Australian treasurer under the country's foreign investment laws.

A shareholders' vote is anticipated in March and the deal expected to close by June 2015.

The Japanese government is planning to privatise Japan Post and list its shares in the second half of next fiscal year.

A $8.4-billion initial public offer (IPO) of its bank and insurance units is planned what could be the biggest IPO by a state-owned company in about two decades. The government eventually plans to cut its stakes in the units to around half.