Toll takes $20m Mayne express to success

Toll Holdings shares are expected to rally today following the company’s acquisition of a stake in the Mayne logistics group.

Toll’s share price could bounce as much as 5 per cent as retail and institutional investors give the thumbs-up to the purchase of the Mayne Express freight company for $20 million.

Jason Smith, transport analyst with Solomon Smith Barney, told The Australian: “The stock is expected to open strongly as the company’s increased earnings are reflected in analysts’ upgrades.”

Mr Smith says Mayne Express is “destined to become another pivotal company-making acquisition for the group” in the same vein as Toll’s purchase of TNT, IPEC and Finemore transport. Mayne Express specialises in overnight courier satchel delivery and will lead Toll into air freight for the first time.

After Friday’s announcement Toll managing director Paul Little said the new company would generate $20 million in synergy savings to offset Mayne Express’s current losses of about $4 million a year. Mr Smith says those synergy benefits will take two to three years to achieve but describes the purchase as “outstanding” and “highly complementary” to Toll’s existing IPEC and DX courier operations.

“Toll is now well on the way to building one of Australia’s truly great companies,” he says.

Even by its own standards Toll has had a busy week. Friday’s purchase of Mayne Express came one day after the company paid $73 million for Brambles Shipping.

Yesterday, Mr Little declared the company was taking a breather to take stock of its purchases.

He told Channel Nine’s Business Sunday: “We’ve got a record of being active and acquiring and then going through a period of consolidation.”

Under the terms of Friday’s sale, Mayne Logistics, known as Loomis, will be carved up three ways. The Express business will go to Toll, the logistics division and Armaguard will go to Linfox for $250 million, and DHL will buy the Canadian arm for $180 million.