Japan Post eyes Australia's Toll

Japan Post offered to take over Australia's Toll Holdings for $5.1 billion on Wednesday, a deal rife with superlatives that could boost earnings of one of the world's largest financial institutions before a planned initial public offering later this year.

"Together, this will be a very powerful combination and one of the world's top five logistics companies," Toll Chairman Ray Horsburgh said in a statement.

Japan Post boasts total assets worth up to 295 trillion yen ($2.47 trillion, 2.17 trillion euros) and listings of its mail, banking and insurance arms could set records in the amount of money raised.

A deal of historic proportions

The sale would mark one of Australia's largest inbound acquisitions, but it must still be approved by the country's Foreign Investment Review Board, which has in the past blocked proposals by foreign state-owned bidders.

Horsburgh, Toll's chairman, and analysts expect the deal to go through.

"I don't think anyone will say no to it. It's a huge premium," Greg Fraser, the head of research at Kimber Capital, told the AFP news agency.

Japan Post made the offer despite the current weakness of the yen, which makes foreign acquisitions by Japanese companies that much more expensive.

Good news and bad news

Toll employs around 40,000 people in more than 50 countries, with business in freight, document delivery and warehouse storage. Trade unions in Australia have raised concerns that the merger could lead to job cuts, although Japan Post President Toru Takahashi said there would be no major staffing changes.

"We would ask that all Toll employees stay with the business," Takahashi told reporters through an interpreter on Wednesday.

The announcement comes on the same day that the Melbourne-based company posted a 22 percent drop in half-year net profits.

Under the proposal, Toll would be run as a division within Japan Post and keep its name.

el/cjc (AP, dpa, Reuters, AFP)