The scheme of arrangement, which has been accepted by Toll’s board, involves a $9.04 per share cash offer priced at a 49% premium to yesterday’s closing price of $6.08 per share and a 53% premium to the three month volume weighted average price of Toll shares.
The offer gives Toll an implied enterprise value of $8 billion inclusive of its $1.53 billion of net debt.
As a sweetener the deal also offers Toll shareholders a $0.13 per share fully franked interim dividend.
The Toll board has recommended the offer in the absence of a higher bid, and the directors intend to vote their shares in favour of the proposal assuming April’s independent expert’s report finds the offer is fair and reasonable.
The proposed acquisition of Toll is part of a plan by Japan Post to become a leading global logistics player.
Toll will be run as a division within Japan Post and will retain the Toll name for its managed transport, energy, liquids transport, marine logistics, mining services, freight and global logistics areas.
Toll management will remain in place with CEO Brian Kruger reporting to Japan Post CEO Toru Takahashi.
“Combined we will have an expansive geographical footprint with Toll providing expertise in the global logistics and transport markets,” Kruger said.
“Japan Post will bring extra capability, financial strength and significant scale to accelerate growth. Together we will offer an enhanced value proposition while delivering innovative, efficient and cost effective solutions to our customers.”
Toll chairman Ray Horsburgh said: “Japan Post is one of the world’s leading postal and logistics companies and Toll is the largest independent logistics group in the Asia Pacific.
“Together, this will be a very powerful combination and one of the world’s top five logistics companies.”
Japan Post’s Takahashi described the deal as transformational for both companies.
“In partnership with Toll we are starting a new chapter of looking outward and becoming a leading global player,” he said.
Japan Post is planning an initial public offering in the next 12 months to help it expand from its shrinking domestic markets. It already has a business alliance with France's GeoPost and Hong Kong's Lenton Group, and it is known to be looking at acquisitions throughout Asia, Europe and North America.
The Japanese company, which provides postal, banking and insurance services, generates $8.8 billion in annual revenues.
The Toll scheme needs 51% of shareholders back the proposal, and 75% of shares held to be in favour at the meeting planned for May.
Treasurer Joe Hockey will also need to sign off on the deal, which is expected to close in June.
News of the takeover offer came as Toll reported a 22% fall in net profit to $136.6 million because demand for its logistics services fell in Australia amid the economic slowdown, including contracts both lost and concluded in the resources and LNG sectors.
Toll’s revenue decreased 2.6% over the previous period to $4.4 billion, and the company said it was making structural changes to protect markets.
Difficult trading conditions in the domestic and Asian marine markets led to the decision in November to exit Toll Marine Logistics Asia and dispose of all remaining assets and to sell the Toll Marine Logistics northern Australia marine freight business.
“Assuming no further deterioration in the external environment, with cost savings, efficiency gains and recent contract wins, we still expect to deliver higher underlying operating earnings in FY15,” Kruger said.
Toll was founded in Newcastle, New South Wales in 1888 by horse and cart hauler Albert Toll, and has since grown into a major international concern with a presence in 50 countries.
The company listed on the Australian Securities Exchange in 1993.