Japan Post’s getting ready to bite the bullet at Australian transport logistics group Toll Holdings.
Less than five years after paying $8 billion for Toll, and following steep write-downs on its investment, Street Talk can reveal the former state-owned logistics and financial giant has called in bankers to pitch potential salvage plans for Toll including a sale.
It is understood Japan Post held a beauty parade for a handful of investment banks and advisory firms in the past fortnight, asking them to present their ideas on potential exit strategies or other methods of attracting capital into the business.
Japan Post is keen to see the business pitched to potential private equity and trade buyers, sources said, in an effort to stem losses in Toll’s troublesome offshore arms and across the group more broadly following a major cyber attack in recent months.
It is understood bankers were told Toll’s core Australian business had been performing solidly prior to the cyber attack, although had since lost ground to arch rival Australia Post. Japan Post and management’s concerns, though, were said to be centred on the company’s offshore footprint.
$2.5 BILLION DEAL
Analysts reckon Toll would likely be worth about $2.5 billion, in line with its net asset value.
The question is whether there is a buyer willing to swallow its many parts and geographies in full. Japan Post was not contested when it turned up with a knockout bid in early 2015, and it’s hard to see strategic types jumping out of the woodwork this time around.
Private equity would be expected to be interested, given the turnaround potential. However, the big firms may want the extra safety of teaming up with a trade player to help manage what would likely be a large and complex transaction
Toll reported a $113.8 million net loss for the 12 months to March 2019 compared with a profit of $11.2 million one year earlier, according to the company’s annual report, which is filed with the Australian Securities and Investments Commission.
Expectations are that the loss could hit $300 million for the year to March 2020 – and be exacerbated in 2021 by impacts from COVID-19.
When Japan Post presented its third quarter financial highlights, it said its international logistics business had already lost $78 million at the earnings before interest and tax line for the nine months to December 31. International logistics includes Toll, JP Toll Logistics and Toll Express Japan, a presentation to shareholders said.
Japan Post is expected to mandate an investment bank shortly. It would mark a big change in direction for the Japanese company, which was viewed as a long-term owner when it swooped in February 2015.