ONJANUARY23 Toll Holdings wrote to shareholders in its rival Patrick Corp extending the deadline for its A$4·6bn hostile bid (RG 1.06 p5) to February 13.
Toll said it had also agreed to ’certain procedural undertakings in order to facilitate its ongoing discussions’ with the Australian Competition & Consumer Commission, after ACCC found that competition would be damaged were the bid allowed to proceed.
ACCC Chairman Graeme Samuel had indicated on January 18 that the watchdog would seek an undertaking from Toll not to go ahead with the acquisition. ’If the undertaking is not given’, he warned, ’ACCC will take appropriate action in the Federal Court.’
ACCC had identified several concerns. A combined Toll-Patrick entity would control significant ’bottleneck infrastructure’ on the rail network and at ports, giving it the opportunity ’to discriminate against and foreclose against rival transport and logistics providers’. As for the joint venture rail operator owned equally by Toll and Patrick (RG 11.05 p721), Samuel said ’100% ownership by Toll would mean that Pacific National would have a compelling incentive to operate solely for the interests of Toll’.
Only an offer of ’significant structural commitments’ would address the concerns arising in the rail business. Undertakings that Toll had offered - such as the lease to a third party of nine Class G locomotives which could be sub-leased for use on the Sydney - Perth corridor - were felt to be insufficient. The locos would not permit a daily service, and their reliability was in question.
The commission also had strong words to say about Toll submitting several versions of its undertakings. ’ACCC generally views such an iterative process as undesirable and inefficient’, it reported.
