Share price rise hits Toll buy-out plans

Toll NZ's rising share price had made a full bid for the company less likely, the managing director of the Australian parent said yesterday.

Paul Little said Toll Holdings, which owns 84 per cent of Toll NZ, said: "The share price level makes it less likely rather than more likely we'll do something about it." Toll Holdings had been expected to buy the shares.

Although shares in the company, formerly Tranz Rail, were unchanged yesterday at $3.18 - down from a $3.32 high earlier in the month - this is a big improvement on the 40c lows of 2003 shortly before Toll bought its share in the company for about $186 million.

Analysts attribute the stronger share price to Toll NZ's half-year net profit of $9.06 million against a $346,000 loss the previous year, and say it's confirmation of Little's management skill, recognised in his being named Business Leader of the Year in the first Transtasman Business Awards this month.

Little said the rising share price was due to thin trading.

Toll was blocked from buying the 100 per cent it wanted in 2003 by New York fund manager Third Avenue, holder of an 8.3 per cent stake, and small shareholders, who rejected its $1.10-a-share offer.

Independent analyst Brian Gaynor said yesterday that it was widely believed Toll would have to make a bid for the rest of the shares. "It doesn't really suit them in the end to have a listed company over here like it is. They wanted 100 per cent in the past; it's just logic to think they still would."

But Little said Toll's 84 per cent shareholding did not restrict it doing business. "We are getting on with running the company and, if there is a belief out there that an offer is to be made by us, I can assure you in the short to medium term there are no plans at all."

Shareholder Tyndall Investment Management said the improved share price was in response to signs of a turnaround.

Little also dismissed speculation that Toll was considering getting into the container stevedoring business with Patrick Corp, Australia's biggest port handler.

Track record

* October 2000: Toll takes over Tranz Rail.

* September 2004: Third Avenue holds out as shares hit $2.78.

* February 2005: Toll NZ posts turnaround half-year profit.

* Early this month: Shares hit $3.32. Paul Little named Business Leader of the Year.

* Yesterday: Shares at $3.18 as market eases.