The Toll Group, Asian provider of integrated logistics, has announced the acquisition pending regulatory approval of Footwork Express, a Japanese express freight operator and one of the countrys largest logistics companies.
This acquisition is not only an important expansion of Tolls express freight operation; it is also a significant investment by an Australian company in the Japanese freight and logistics market, said Toll Groups Managing Director Paul Little. Japan has the largest economy in Asia and the second largest in the world and this acquisition gives Toll a very significant presence in this key market. Footwork Express employs more than 5,000 people, has revenue of approximately A$775 million and is one of the top ten domestic logistics providers in Japan. Toll has held a minority stake in the business since April 2006.
Little continued: The control that we will gain from the acquisition of the remaining equity will allow us to make the operational changes needed to secure the future success of Footwork within Japan and the region. The Toll Groups range of world class express service providers includes Toll IPEC, Toll Priority, Toll Express and NQX Freight System. These businesses are market leaders and the expertise the Group has built over the years, combined with the knowledge of the Japanese market that comes from our existing stake in Footwork, give us confidence in this acquisition. When we acquired the IPEC express parcels business in Australia during 1998 it was underperforming and had fallen well behind its competitors. Over the next few years we turned that business around laying the groundwork for the business market leadership today. I am delighted that Pat Kearns who led the Toll IPEC transformation has agreed to head up Tolls presence in Japan and will be working closely with Footworks senior management and customers. We anticipate the acquisition will be EPS positive in year one. The acquisition will be funded out of Tolls existing cash reserves.
The acquisition price of A$95 million (including an estimated potential earn out payment of $15 million) for the remaining 64 per cent interest reflects an enterprise value of $270 million, including the business existing debt of A$120 million. As a result of recent changes to accounting standards, Toll will be required to write down the carrying value of its existing 36 per cent holding to a fair value based on the 64 per cent that is being acquired. This will result in a non-cash charge of up to A$30 million in the 2009/10 year.