Australian monopoly authorities have blocked the A$4.6 billion (US$3.5 billion) hostile takeoverbid of logistics group Toll Holdings for port and transport operator Patrick Corporation in a
surprise decision. Analysts had expected regulatory approval for the deal which would have createda new mega-group in the Australian transport industry. Toll Holdings is the parent group ofAustralian express operator Toll IPEC.The Australian Competition and Consumer Commission (ACCC), which has examined the takeover forthe last few months, announced that it opposed the transaction on competition grounds and warned oflegal action if Toll maintained its bid. ACCC Chairman Graeme Samuel declared: “The ACCC will beseeking an undertaking from Toll that it will not proceed with the acquisition. If the undertakingis not given, the ACCC will take appropriate action in the Federal Court.”
“The ACCC’s investigation found that the proposed acquisition would be likely to substantiallylessen competition in several markets in the transport sector,” Samuel explained. The ACCC said itdid not consider that Toll’s final offer of undertakings was nearly sufficient to address thecompetition concerns identified. “Even with Toll’s proposed undertakings significant detrimentaleffects on competition are still likely to arise”, Samuel added.
The Australian monopoly watchdog said it was particularly worried that a combined Toll-Patrickgroup would control significant rail and port infrastructure which could be used to discriminateagainst or keep out rival transport and logistics providers. This would damage competition, hinderpotential competition and raise prices. The 100 per cent control of the largest Australianinter-state freight railway, Pacific National, which Toll would have gained was a particular worry,the body said. Currently a 50-50 joint venture between Toll and Patrick, Pacific National isobliged to offer fair access to all freight forwarders.
Toll Holdings reacted to the announcement only by saying that it was now considering itsoptions. Patrick Corporation, which opposed the bid, welcomed the decision and said it now plannedto expand its own business by buying regional transport company FCL. “The Toll bid wasill-conceived from the outset. It has been a failure of both strategy and execution,” said Patrickmanaging director Chris Corrigan. “Patrick can now focus on further growing its business for ourshareholders free from the unwelcome and expensive distraction of the Toll bid.”
Toll Holdings had extended its hostile offer three times pending the competition authoritydecision. It had offered concessions on various operations, including rail freight, freightforwarding, shipping and automotive logistics, in order to secure competition authority backing.The bid was launched last August.
