Japan Post to Buy Logistics Group Toll Holdings

By Ross Kelly 

SYDNEY--Japan's state postal service agreed to buy Australian logistics firm Toll Holdings Ltd. for 6.49 billion Australian dollars (US$5.07 billion), as it seeks to further boost its global-distribution network ahead of a share-market listing.

Japan Post Holdings Co. has for a while been looking to expand into fast-growing Asian markets to help offset weaker conditions at home--where population growth is slowing and Japanese people are increasingly communicating through email and other electronic messaging systems instead of writing letters processed by the post office.

Last year, Japan Post launched an international parcel-delivery service through a joint venture with France's GeoPost SA and Hong Kong-based Lenton Group Ltd., a move that brought it more directly into competition with global logistics giants such as UPS and FedEx Corp.

In a statement Wednesday, Japan Post said buying Toll would help diversify its revenue, as well as boost its enterprise value ahead of the planned listing, which the Japanese government hopes will provide cash to help finance reconstruction following the March 2011 earthquake and tsunami.

"Toll has a strong presence in the Asia-Pacific region, which has excellent logistics growth potential, and a portfolio that is balanced by business and region," Japan Post said.

Toll's business has been weighed down for several years by a sharp slowdown in investment in Australia's mining industry, which has crimped demand from resource companies for its freight services. Its shares have tracked sideways for the past six years.

The Melbourne company, which traces its roots back to 1888, has also struggled to gain traction in competitive Asian markets. In November, Toll said it would try to sell loss-making and unwanted assets in an effort to turn its performance around.

The logistics company has urged its shareholders to accept Japan's Posts offer of A$9.04 a Toll share, which represents a 49% premium to its last closing price of A$6.08 a share. "Together, this will be a very powerful combination and one of the world's top-five logistics companies," Chairman Ray Horsburgh said.

The Japanese government owns all of Japan Post, which in turn wholly owns its postal, banking and insurance units. Government officials have said that they hope to raise tens of billions of dollars from the partial IPO, which is scheduled to kick off toward the end of this year.

Write to Ross Kelly at [e-mail]

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