Mayne in talks over logistics sale
Mayne Group has reopened talks with trade buyers for its $500 million logistics division, a move which will potentially scuttle a demerger of the business from its core healthcare operations.
As revealed by The Australian Financial Review on Tuesday, Mayne and its adviser, UBS Warburg, have re-entered discussion with logistics suitors, principally a syndicate of Linfox, JP Morgan and US-based private equity firm Newbridge Capital.
The Linfox grouping has set its sights on Mayne’s Australian logistics division, which consists of the group’s warehouse and transport units, and Armaguard.
A catalyst for the latest round of negotiations was the re-emergence of an interested party for Mayne’s Canada express network, Loomis.
Another issue between the parties, which is understood to have been resolved, was that the Linfox syndicate did not wish to acquire the Mayne Couriers unit.
Although only a small proportion of its total logistics operations, Mayne has resolutely said it would only sell its sprawling transport empire as a whole.
Canada Post subsidiary Puralator Couriers, as well as UPS, have been thought to be interested parties, however analysts said global transport giant DHL was a more likely buyer for the Canadian outpost.
Insiders said there was no guarantee of a resolution but that Mayne wished to provide its logistics suitors with adequate time to finalise an offer.
It has agreed with the parties conducting due diligence that acceptable sale terms must be reached by October 31 or a demerger with the logistics business, rebranded Loomis, would proceed; it would be floated separately on the Australian Stock Exchange.
“I’m still sceptical that a trade sale will be struck,” said one Mayne source. “We just have to wait and see if an outcome is possible that will be in the interests of Mayne shareholders.”
Yet the health-care group, whose shares have fallen 49 per cent this year because of the deteriorating performance of its private hospital network, is under pressure to pursue a trade sale over the demerger.
“Certainly a trade sale is cleaner and much more tangible from the point of view of Mayne shareholders,” said Sagitta Rothschild portfolio manager Andrew Waddington.
“A trade sale for cash proceeds would enable the funds to be redeployed as a share buyback or some type of dividend payment.”
Mayne shares fell 2¢ to $3.50 on Friday.
At its full-year profit result last month, Mayne unveiled an on-market buyback of up to 9.3 per cent of its issued capital, or 75million shares.
This will be delayed for three weeks while the trade sale negotiations continue.
KEY POINTS
* A planned demerger by health-care group Mayne of its logistics division has been put on hold.
* The company is negotiating with firms interested in the warehouse and transport divisions.
* If an agreement is not reached by next month, the company will proceed with the demerger.
