By Ross Kelly
SYDNEY--Japan's state-owned postal service has agreed to buy
Australian logistics company Toll Holdings Ltd. for 6.49 billion
Australian dollars (US$5.07 billion), as it seeks new sources of
growth ahead of an initial public offering planned for later this
year.
Japan Post Holdings Co. has sought to expand into fast-growing
Asian-Pacific markets to offset weakness at home, where population
growth is slowing and demand for traditional postal services is
weakening. 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 United Parcel Service Inc. and FedEx Corp.
Toru Takahashi, chief executive of Japan Post, said Toll was a
good fit because of its strong road, rail, air and shipping
presence in Asia Pacific and experience forming relationships with
multinational companies to manage their freight and logistics
needs. "We believe the Asian region will continue to be a growth
engine," Mr. Takahashi told reporters on a conference call.
Japan Post is one of many Japanese companies to look overseas
for growth in recent years to counter sluggish growth at home, a
trend that continues despite a sharp decline in the value of the
yen since late 2012. On Tuesday, Japanese logistics-service
provider Kintetsu World Express Inc. said it had agreed to buy APL
Logistics Inc. from Singapore-based Neptune Orient Lines Ltd. for
$1.2 billion. Mizuho Financial Group Inc., meanwhile, is in talks
to buy a stake worth more than $500 million in Philippine lender
Bank of Commerce from conglomerate San Miguel Corp., people with
knowledge of the deal said Wednesday.
Japan Post said acquiring Toll would help it diversify its
revenue sources and raise its enterprise value ahead of its IPO.
Japan Post will at the same time separately list its banking and
insurance units, Japan Post Bank and Japan Post Insurance. All
three offerings could raise a combined $10 billion to $20 billion,
according to analysts.
Mr. Takahashi said Japan Post would explore more acquisitions in
Asia Pacific, but would also pursue opportunities in Europe and
North America. "It would depend on whether we were able to find
appropriate targets," he 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. Toll's shares have tracked sideways for the past six
years.
The Melbourne-based company, which traces its roots to 1888, has
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.
Toll has urged its shareholders to accept Japan Post's offer of
A$9.04 a share, a 49% premium to its last closing price of A$6.08.
"Together, this will be a very powerful combination and one of the
world's top five logistics companies," Chairman Ray Horsburgh
said.
This year's planned IPO for Japan Post has been a longstanding
goal for the Japanese government, which owns all of its shares and
hopes to use the money raised to help finance reconstruction
following the March 2011 earthquake and tsunami. Privatizing the
postal service was a signature goal of former Prime Minister
Junichiro Koizumi.
Investors have questioned Japan Post's future growth prospects,
though, noting that around 80% of its profits came from its banking
and insurance units.
Write to Ross Kelly at ross.kelly@wsj.com and Atsuko Fukase at
atsuko.fukase@wsj.com
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