Japan Post agrees to $5.1 billion takeover of Australia's Toll Holdings

Wed Feb 18, 2015 2:05am EST
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By Byron Kaye and Taiga Uranaka

SYDNEY/TOKYO (Reuters) - Financial giant Japan Post Holdings Co Ltd launched its global expansion strategy with its largest ever deal on Wednesday, agreeing a A$6.5 billion ($5.1 billion) takeover of Australian freight and logistics firm Toll Holdings Ltd.

The proposed cash acquisition would give Japan Post a reach spanning 55 countries and a surge in earnings power ahead of a planned listing later this year, as it aims to become a leading international logistics player as well as one of the world's biggest financial institutions.

The deal will help answer critics who say state-owned Japan Post lacks a global growth story to attract investors and offset the decline in its domestic postal service business.

"We have made a first step toward becoming a global logistics company ... The days are over when logistics companies can survive by shutting themselves within Japan," Japan Post Holdings President Taizo Nishimuro told reporters in Tokyo.

Combined, the two would be the world's fifth-largest logistics group after FedEx Corp in terms of revenue, Japan Post said.

Japan Post has total assets of some 295 trillion yen ($2.47 trillion) including its mail, banking and insurance service. The banking arm alone ranks 17th in the world, even though its overseas business is currently limited to joint operations in several Asian countries.

By snapping up Toll, the Japanese giant will gain a wealth of experience in offshore deals as it tasks the Australian firm with leading acquisitions throughout Asia, Europe and North America.

In what would be Australia's fifth-biggest inbound acquisition and the largest takeover of an Australian company by a Japanese firm, Japan Post offered A$9.04 per Toll share - a 49 percent premium to Toll's last closing price.   Continued...

An employee of Japan Post works in Tokyo, February 18, 2015. REUTERS/Issei Kato