Private Equity, investment and Transformation company Allegro has purchased one of Australia’s oldest express freight operators, Toll Global Express, from Japan Post. The Global Express business (currently a unit of TOLL HOLDINGS)offers an established and extensive network of DOMESTIC AIR FREIGHT and express parcel, freight delivery and domestic forwarding services in Australia, and transport and contract logistics services in New Zealand. Japan Post purchased the TOLL GROUP in 2015, paying a reported A$6 Billion (approx). Reports are that Allegro paid A$7.8 million (as reported to the Tokyo Stock Exchange on the 21st April, 2021), plus assumed the debt of the business unit . Allegro have reported they have secured approx. 500 million in funds, which they intend to use to restructure and grow the investment. Toll Global Express (TGE) turned over approx. 3 billion last financial year.
Adrian Loader, a founding partner of Allegro will chair the new acquisition.
Toll Global Express is an awesome Australian express freight operator, perhaps, it could be argued ” the best”. The company enjoys the benefits of well trained and experienced staff and an Australian express freight network that has been developed over 30 years.
The Transport Workers Union (TWU) wants Allegro to inject capital into the business so as to ensure the long term survival of TOLL GLOBAL EXPRESS.
TWU National secretary Michael Kaine, said the union stands ready to work with Allegro to maximize Tolls market position, however investment in the company is needed.
Great to hear the TWU is prepared to work with Allegro, TO BUILD A BETTER, SAFER AND MORE PROFITABLE Toll Global Express. Frankly, the TWU must realise cost cutting and some staff redundancies will be part and partial of a successful Global Express restructure. The TWU themselves have pointed to the GIG economy and its effect on freight rates. If the TWU truly want investors to inject cash into the Global Express business and a safer work place and improved pay and conditions for its TOLL workers, then they will need to go ALL OUT with their support of Allegro and any cost cutting plans they may have in the future. Looking into the future, any Industrial action (or threats of industrial action) by the TWU in response to Allegro’s cost cutting measures would cause a serious loss of investor confidence in the business and jeopardize any possible future funding. On the flip side, Allegro needs to invest in and go “ALL IN on the booming e -commerce business/trade”. In addition, to combat the incoming “GIG ECONOMY ” Toll Global Express need to be less reliant on revenues from just the B2B SERVICES. I believe the company should introduce an “inverted pyramid organizational structure”. Take selected business clients of Australia Post, now parcel services need to be expanded to include weekends (7 days per week). The company should be focused on service standards to customers and look to improve service levels by introducing high technology systems and devises. The Global Express team need to go back to transportation 101, ” the basics”, go to the client base and market place with vigor, “press the flesh” and impress upon customers (and the market place) that TOLL GLOBAL EXPRESS is an Australian Company with new Australian owners and improved high tech operational systems (instead of contacting the customer to jack up rates, as they have been doing lately!). The point of difference needs to be Global Express’s higher service levels (compared to the GIG economy and existing competitors) . The Allegro purchase of Global Express is the last roll of the dice, as they say, there is no PLAN B. Its exciting times at Global Express, the hardworking and experienced team at Toll (and everyone associated with the business), need to go ALL-OUT and pull together to get this great Australian transportation company “up out of the saddle and running again!”
The big problem with TOLL GLOBAL EXPRESS is that has to many fixed costs. The express FREIGHT services business’s that TOLL purchased from the original owners , (Mayne Nickless) WARDS EXPRESS , SKYROAD EXPRESS, JETSPRESS AIR COURIERS, THE OVERNIGHTERS, JETSPRESS ROAD AND IPEC offered B2B services and were not set up to support the huge fixed costs that Global Express has acquired over the years. Wards Express, Skyroad Express, The Overnighters and IPEC are some of Australia’s oldest express freight operators and all have been market- leaders and very profitable business units at one time or another, however they were all run as variable low cost structured business with very few assets.
Obviously Allegro believes it can restructure and turn TOLL GLOBAL EXPRESS’s fortunes around. We wish Allegro good luck and will be watching closely for further developments
TOKYO STOCK EXCHANGE NOTICE RE SALE OF GLOBAL EXPRESS
LODGED BY JAPAN POST
21 APRIL 2021
Notice Concerning Partial Business Transfer of Subsidiary Company
Notice Concerning Partial Business Transfer of Subsidiary Company Japan Post Holdings Co., Ltd. (Chiyoda-ku, Tokyo, President & CEO Hiroya Masuda), Japan Post Co., Ltd. (Chiyoda-ku, Tokyo, President & CEO Kazuhide Kinugawa) and Toll Holdings Limited（Managing Director Thomas Knudsen, hereinafter “Toll”）a subsidiary of Japan Post Co., Ltd. resolved to transfer the global express business of Toll (hereinafter the “Express Business”) to Australian Parcels Group Pty Ltd, Australian Parcels Pty Ltd, Tasmania Maritime Pty Ltd, NZ Logistics Holdings Limited, affiliates of Allegro Funds Pty Ltd (collectively “Allegro”), at the board of directors meeting held today (hereinafter the “Transfer”).
Reasons for Transfer of Business
Following the buyout of Toll in 2015 with the intention of growing and expanding the global logistics strategy, Japan Post Group has aimed for business growth through various measures. However, Toll has experienced substantial deterioration in financial results due to the economic downturn in Australia, which led to the announcement of “Recognition of Impairment Loss, Revision of the Consolidated Financial Results Forecast for the Fiscal Year Ended March 31, 2017 and Recognition of Loss on Valuation of Stocks of Subsidiaries and Affiliates on the Non-consolidated Financial Results of a Subsidiary” in April 2017. Since then, in an effort to improve Toll’s financial results and to construct the basis for accelerating future growth, Japan Post Group has taken measures such as management replacement, employee downsizing, and integration of company divisions. Despite these measures, the competitive business environment, effect of the targeted cyber-attack and decline in domestic and international demand caused by the COVID-19 epidemic have contributed to creating an increasingly challenging environment for Toll.
UNOFFICIAL TRANSLATION Although the Company pays close attention to provide English translation of the information disclosed in Japanese, the Japanese original prevails over its English translation in the case of any discrepancy.
2 Given these circumstances, Japan Post Group has considered various business strategical options aiming to enhance Toll’s growth, but ultimately decided that the best option would be to sell the Express Business that has a particularly immense deterioration in financial results. As is stated in “Notice Concerning the Decision to Consider the Partial Sale of Business in Toll Holdings Limited” dated November 5, 2020, Japan Post Group has decided to consider the sale of the Express Business and have been working to move forward with the consideration of the Business Transfer. After careful consideration by Japan Post Group, Toll signed an agreement to Transfer the Express Business to Allegro. In order to conclude the Transfer, it is necessary to obtain approval from Australia’s Foreign Investment Review Board and New Zealand’s Overseas Investment Office as well as meeting various conditions including the completion of internal restructure of Toll. These procedures are expected to be completed by the end of June, 2021. The Transfer includes the Express Business conducted by Toll as well as properties, liabilities, and employees owned by Toll in relation to the Express Business. The net proceeds are approx. JPY 0.7 billion (AUD 7.8 million). Furthermore, the amount of final payment will be finalized after adjustments are made per increase/decrease in working capital at the time of closing. (Note) Calculated by AUD 1 = JPY 84.36
Details of the Business Transfer
1） Trade Name Toll Holdings Limited
2） Location Melbourne, Victoria, Australia
3） Name and Title of Representative Thomas Riber Knudsen (Managing Director)
4） Business Description Integrated logistics company that manages a forwarding business, 3PL business, and Express Business
6） Establishment 1888
7） Major Shareholders and Shareholding Ratio Japan Post Co., Ltd. 100%
Outline of Business Subject to Transfer
The Express Business provides road, rail, sea and air freight service utilizing Toll’s network in Australia and New Zealand.
3) Operating results of the Express business Fiscal year ended March 31, 2020 Third quarter of the fiscal year ended March 31, 2021 Operating Revenue AUD 2,969 million AUD 2,042 million Operating Profit and Loss（EBIT） △ AUD 100 million △ AUD 83 million (Note)
The consolidated book value of the business subject to the Transfer is AUD 820 million (approx. JPY 69 billion). 3 3.
Outline of Allegro Funds Pty Ltd
1） Trade Name Allegro Funds Pty Ltd
2） Location Sydney, Australia
3） Name and Title of Representative Adrian Loader (Founder and Managing Director) （
4） Business Description Private Equity
5） Establishment 2004
6） Relationship between the listed company and the fund Relationship between the listed company and the fund Not applicable
Relationship between the listed company and the managing partner Not applicable
Relationship between the listed company and the local agent Not applicable
1）Date of Resolution of the Board of Directors April 21, 2021
2）Contract Date April 21, 2021
3）Business Transfer Date End of June, 2021（schedule）
Future prospects Due to the Transfer of business, recognition of JPY 67.4 billion (Impairment loss of JPY 61.9 billion, other extraordinary loss JPY 5.4 billion) is expected on the consolidated financial results for the fiscal year ended March 31, 2021. While the present record of extraordinary loss falls under the minimal standard criteria of timely disclosure, Japan Post Group is closely reviewing the effects of the Transfer on the consolidated financial results after March 31, 2021.