Australian transport merger
The recent Dubai Ports/US port security panic put a spotlight on a little understood but critical industry, worldwide transport and logistics. Increasingly, this sector is dominated by fewer and fewer companies, whether in ports and airport management, or freight shipping and trucking. The world is increasingly dependent on lifelines of just-in-time deliveries from far-away countries, and any disruption to the shipment of computer parts, oil, soybeans, or televisions threatens economic chaos, both for the producer and for the consumer.
The intermediary companies get fewer and more crucial. The latest move in that sector is the announced acquisition of Australian ports and airline operator Patrick Corporation by rival transport company Toll Holdings, also Australian. The $4.9 billion (US) deal comes after a long hostile courtship. The combined operations will make a dominating freight and logistics company in Australia and beyond.
Toll Holdings already, before the deal, controls almost 50% of the logistics and freight market in Australia. It is the #1 trucking company in Australia and #2 in New Zealand. It is a leading provider of rail freight services and freight shipping. It has major warehousing facilities and port management services. It also has major presence in China, Thailand, and Malaysia. Toll also recently bought Singapore's SembCorp Logistics Ltd. for $870 million.
Patrick Corporation owns assets in the following areas:
- Container terminals for shipped freight (Australia's largest)
- Stevedoring services and port operations (Australia's largest)
- Shipping (operating freight ships between Tasmania and mainland Australia)
International freight (with a network of offices in over 200 ports worldwide)
- Air freight (within Australia)
- Logistics (including storage and refrigeration)
- Aircraft maintenance (Australia's biggest provider of such services)
Patrick also owns a majority share in Virgin Blue Airlines, which is teh elading low-cost airline serving Australia and New Zealand. It bought control of the Richard Branson-founded airline in 2005.
Toll will have to sell off its 50% holdings in Pacific National railroad, a major Australian rail line. The sales will likely fetch over $1 billion. It's not certain waht it will do with Virgin Blue.
The acquisition is the fourth largest deal in Australian history. As noted in the Australian newspaper The Age ("Toll triumphs", 4/15/06):
Toll will be a transport titan. It will control half Australia's international trade though Patrick's stevedoring operations at Australia's major ports. The merged group will own thousands of trucks and train wagons, hundreds of locomotives, ships and more than 400 warehouses and terminals around the country. It also has rail, trucking and shipping assets in New Zealand.
Interestingly enough, Dubai Ports will be its biggest Australian competitor in terms of ports mangement.
