Japan Post to sell part of Toll to Australia's Allegro Funds for US$6m
JAPAN Post aims to restructure its international strategy by selling off unprofitable parts of Toll Holdings to an Australian investment fund for AUD7
29 April 2021 - 19:00
By selling Toll's logistics and home delivery operations in Australia and New Zealand to Allegro Funds, Japan Post will assume several billion dollars-worth of debt and will log an extraordinary loss of about JPY67.4 billion (US$$624 million) for the fiscal year ended in March 2021.
The sale marks the latest chapter in the Japanese postal group's troubled ownership of Toll, which it acquired in 2015 for JPY620 billion in hopes of gaining international logistics know-how for fresh growth. The deal will force Japan Post, which is majority owned by the government, to reconsider its international strategy.
Japan Post picked Nomura Securities and JPMorgan Securities Japan as advisers for the deal and began the process of selecting buyers in November. Toll's lacklustre performance made the search difficult.
Toll suffered an operating loss of AUD10 million for the nine months through December, owing mainly to losses in the Australia-focused segment now being sold. This segment's operating loss reached AUD83 million, widening by AUD25 million from a year earlier.
After selling the struggling Australia and New Zealand operations, Toll will retain its international logistics business.
Toll said the sale of its Global Express business is targeted for completion by June 30, pending regulatory approvals.
'The divestment is consistent with Toll's strategy to focus on being a preeminent Asia-Pacific logistics provider through its core businesses in contract logistics and freight forwarding,' Toll Chairman John Mullen said in a news release.
Adrian Loader, an Allegro founding partner, said it is preparing a cash injection. 'We are excited about the future potential for Global Express and are committing $500 million in funding to continue the business' transformation and support its growth over the long term,' Mr Loader said in the release.
Toll grew out of more than 100 mergers and acquisitions, creating what analysts have called inefficiencies including a patchwork of software. A drop in logistics volume as Australia's economy slowed intensified the pressure on the group's high costs.
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