Toll scuttles Mainfreight's bid

By PAM GRAHAM

Toll Holdings of Australia has blocked Mainfreight's full takeover of Owens Group to deal itself into New Zealand's next round of transport consolidation.

AMP Henderson has sold 6.7 million Owens Group shares, 11.88 per cent of the company, to Toll Holdings for 5c a share more than Mainfreight's $1.10 a share offer. That means Mainfreight cannot reach the 90 per cent level needed before it can compulsorily acquire remaining shares.

The Australasian fund manager was accused of selling out the local transport industry for a gain of only $335,000.

The Mainfreight bid for Owens creates a big New Zealand transport company to compete against a Toll-controlled Tranz Rail.

Mainfreight expected to be across the 90 per cent line today if AMP had accepted its offer.

Instead, it must decide whether to waive a 90 per cent acceptance condition and live with a competitor as a minority shareholder and the extra costs of Owens remaining listed.

Mainfreight's shares fell 7.53 per cent yesterday, taking $9.1 million off its market value.

Owens shares rose 7.5 per cent to $1.15.

"AMP have shown they have no allegiance to the New Zealand transport industry," said Tim Preston, managing director of ASB Securities.

"They should move their head office to Australia, because that is where they're aligned."

Mainfreight managing director Don Braid said he was disappointed.

"It goes without saying where they [AMP] stand in the eyes of a lot of New Zealanders today."

AMP strategist Nat Vallabh said Toll approached the fund manager on Tuesday night, and its decision was in the best interests of its investors.

From a national pride perspective it had hurt, he said.

"We do consider the industry and nationalism, but at the end of the day we felt the higher value our investors received over-rode that.

"I still think there will be some rationalisation in the industry. Owens, Toll and Mainfreight will have to sit down round the table and discuss it."

The fund manager had said it was likely to accept Mainfreight's offer in the absence of a higher offer, and that it would not block the company from reaching 90 per cent.

Little was at his company's annual meeting in Australia yesterday, where he explained that the New Zealand expansion was a growth opportunity that would provide 20 per cent of his company's revenue and a way of supporting international clients.

The purchase of Owens shares was "to get us in the game", he said before the meeting.

"It was our initiative. We had been looking at our options for some time with Mainfreight, Owens and Tranz Rail before we made a move on Tranz Rail.

"I guess we have always felt there are a lot of opportunities for us between Tranz Rail and Owens in synergies, and that has become more apparent.

"At this stage, I'm not saying that we are doing anything more than sitting on our stake.

"The intention is to increase our options and we think there is some major rationalisation that is going to occur and we want to be part of it."

Asked if Mainfreight was ultimately a target, he said: "I'm not ruling anything in or out."

Mainfreight is protected from takeover by holdings of founder shareholders.

Mainfreight and Toll had been having "good" discussions about Mainfreight putting more freight on rail.

They did not talk yesterday.

Toll is also said to have been scouting private trucking companies serving the forestry industry.

"We are looking at all opportunities," Little said.

"That includes larger listed groups and some of the smaller listed specialist groups and we'll continue to do that."

Braid said Toll had sought to dominate transport in Australia, and was looking to do the same in New Zealand.

"Clearly we have our game plan, and we saw the move that we had taken with Owens as being the best thing for the New Zealand transport industry," he said.

"Depending on what we will close at we can continue to do that."

Mainfreight estimated it had 76.5 per cent of Owens shares, and Braid said that if it ended close to 80 per cent by the close of the offer today it would have a large amount of control over the business.

The Owens family have accepted Mainfreight's offer and is publicly supporting the bid. Doug Owens said yesterday he was waiting to see what developed.

He had believed that the Owens transport and Tranz Rail road transport businesses were a good fit.

Toll was blocked from getting 90 per cent of Tranz Rail by three funds, but is now running the company.

Shareholdings

* Toll Holdings owns 83.46% of Tranz Rail.

* Yesterday, Toll bought 11.88% of Owens Group for $7.7 million.

* Mainfreight has 76.62% of Owens Group.

* Mainfreight's takeover offer for Owens closes today.