...Where to for Toll Racing...

[retro]

credit to.....www.thecouriermail.com.au...

Where does this corporate take over battle leave Toll Racing...given the HRT rumour??

Odd couple to slug out in transport battle

Two contrasting corporate players are fighting to build a national transport giant, as James McCullough and Anthony Marx report

27aug05

ONE sponsors V8 Supercars. The other rides an Italian push bike..

One likes nothing better than tucking into a pie and a beer while taking in the footy at the MCG...

The other is a reclusive aviation buff who enjoys fine wine and classical music.

The two men, Paul Little and Chris Corrigan, have vastly different personalities but they share the same business aim: to build Australia's biggest road, rail, port and aviation conglomerate.

Little fired the first shot this week, with his Toll Holdings mounting an audacious near-$5 billion hostile takeover bid for Corrigan's Patrick Corporation.

Corrigan immediately spurned the offer, which followed months of inconclusive talks between the two sides.

The battle for control of the national transport market is now shaping up to be one of the most hard fought corporate showdowns since Corrigan went head-to-head with Maritime Union of Australia national secretary John Coombs in the bitter waterfront dispute of 1998.

Shaw Stockbroking research analyst Brent Mitchell said both men's strategies would most likely aim to convince shareholders of the logic of their respective positions.

"Little would be focusing on the growth and the advantages to come from the vertical integration benefits that Patrick brings, the total transport requirements from farm gate to customer. There's also the reduced reliance on Virgin Blue and the growth potential within Toll," Mitchell said.

"Corrigan's talking about organic growth that is going to come out of the ports, the benefits from the heavy capital expenditure program Patrick has put in to Brisbane, Sydney and Melbourne ports and the benefits that can come through from that in terms of the transport, distribution or consolidation of exports and imports."

As tough a tactician as Corrigan is considered to be, Little and his team may have an edge. "I think Toll is more than Paul Little. I think they have a broader and more in-depth team behind them," Mitchell said.

He said Toll comes from a more experienced transport background and has good operating systems in place, whereas Patrick tends to be more autocratic.

Toll has embarked on an aggressive acquisition strategy over the past few years which has seen its share price soar and the group emerge with a strong foothold in the road and rail sector.

Patrick has been slower in expansion, sidelined to an extent by the waterfront dispute, but now has an impressive portfolio in ports and rail.

That includes its joint venture with Toll in the Pacific National rail line.

But Patrick has stumbled badly with its 62.4 per cent stake in Virgin Blue Airlines, which was forced to issue another profit downgrade this month because of rising jet fuel prices.

As a result, Patrick has also revised its forecast profit downwards.

Virgin Blue remains one of the few carriers to have no fuel hedging insurance and that tactical error resulted in a bitter slanging match between Virgin Group boss Sir Richard Branson and Corrigan this week. Toll wants to sell down the holding in Virgin to as low as 10 per cent and have it start carrying air freight.

Little and Corrigan's backgrounds are as different as their strategies.

Little spent 18 years in the Mayne Nickless transport and logistics bunker, holding several senior management positions before joining Toll Transport in 1985 as national manager of the interstate division.

A keen jogger who enjoys boating, his favourite pastime is watching throbbing V8 supercars scream around race tracks, a passion that costs him nearly $2 million a year as the major sponsor of the Anthony Tratt Racing team.

He developed the liking for speed while racing Porsches in various events and has remained committed to the sport despite Tratt, one of the best-liked drivers in the circuit, consistently finishing at the rear of the field.

"An indication of Paul's character is that even though he runs one of the largest transport companies around, he has been very loyal to running a team which is always running around the back," said former Team Dynamic chief executive Mark Wild.

Well-known V8 supercar and Nascar operative Terry Little describes Little as "pretty well your average knockabout Aussie bloke".

He has presided over Toll's rise to become Australia's largest transport and logistics company, with much of the success built on 43 acquisitions across Australia and the Asia-Pacific over the past 16 years.

Married with three children, the executive, 57, has watched his personal wealth rise impressively over the past year. BRW lists him as worth $497 million, up $124 million on the previous year. Little also has an impressive property portfolio, owning a house adjoining the Portsea golf course on the Victorian coast, a penthouse in Melbourne's inner-city Southbank and a $13.5 million historic mansion in Toorak.

Corrigan, on the other hand, is a soft-spoken strategist who for the first time in ages is on the back foot, feeling the heat from a blow torch aimed squarely at his belly.

The businessman, 59, cut his teeth in the corridors of blue blood merchant bank BT, becoming its youngest chief executive in history and rapidly moving on to establish his own listed acquisition vehicle, Jamison Equity.

Despite his outwardly reserved character, his ruthless nature became evident during the waterfront dispute, with attack dogs and balaclava-wearing security guards breaking the back of the powerful MUA.

Waterfront, a book about the dispute written by journalists Helen Trinca and Anne Davies, provides an interesting insight into Corrigan, revealing clandestine negotiations between government officials and corporate representatives to crush organised labour.

What's not so well appreciated outside business and investment circles is just how powerful Patrick has become. Corrigan has built the stevedore into an integrated logistics force with a large and growing footprint in Australia's transport sector, from the controlling stake in Virgin Blue to airfield assessment contracts in post-war Baghdad.

As the bid for Corrigan's pride and joy gains momentum, Toll faces a daunting array of hurdles, not the least of which is securing at least 90 per cent of Patrick shares and approval from the ACCC. There is speculation that Corrigan and fellow director Peter Scanlon, a former John Elliott strategist, could control more than 10 per cent of Patrick shares and thereby thwart the 90 per cent target.

Toll may gain effective control anyway with a lower threshold of majority share ownership but analysts say such a scenario would complicate the firm's plan to merge with Patrick.

"The difference between full control and 80 per cent is the ability to integrate the businesses and not being able to integrate the businesses takes away some of those $55 million in synergies (cost savings)," Mitchell said.

There has also been speculation about Corrigan turning the tables on Little and launching his own takeover bid for Toll. Each company has about the same market capitalisation.

Some feel such a move is unlikely because Toll's directors control a greater proportion of the company than their counterparts at Patrick. Patrick would also have to pay a higher premium.

Many believe that Toll will have to lift its initial $6.70 cash and scrip bid price – and could end up paying too much. Others think even paying a premium would be worth it because such opportunities do not come along often.

Market analysts are in general agreement that Toll only has a 50/50 chance of success with the ACCC presenting the largest stumbling block, although Toll may secure approval by divesting itself of Tasmanian and Bass Strait assets.

Toll got a boost this week in its efforts to pass the ACCC test when one of its biggest clients, Woolworths, endorsed the potential benefits of its Patrick takeover.

"I suspect the Patrick/Toll merger, if it goes ahead . . . will be a step in building greater efficiency in the all important logistics movement in Australia," chief executive Roger Corbett said at a Woolworths results presentation.

Australian Logistics Council executive director Hal Morris said there are some worrying aspects about the takeover, including the fact that it would account for about 80 per cent of all the nation's car carrying capacity.

But the transport industry has been undergoing consolidation over the past decade and clients will not mind who they deal with as long as prices remain reasonable.

"Customers couldn't care less. They just want their good moved from point A to point B as quickly as possible," Morris said.

But Andrew Craig, Queensland director of the Australian Industry Group, warned that the new business could also lead to monopoly pricing and anti-competitive barriers to entry.

"If Australian companies are going to compete in the global market place, size does matter. The trick is that it must still provide services at a competitive price. Industry will be caught between the devil and the deep blue sea," Mr Craig said.

[GTRMagic]

I saw this article too, and find it strange... I can recall discussions a couple of years ago, about Toll Holdings only contributing to the racing program to the tune of $100k a season, yet there was a full time crew and operating budget somewhere around $1.5m per annum....

The dividends must be pretty special to keep the race car ticking along

I have a question however... is Terry Little a relation of Paul Little???

[Chucky]

I've never drawn that connection before but it does explain a few things.

And, according to Paul Little, the Toll Racing thing costs them nearly 2 million a year and he keeps doing it for corporate morale more than anything!

[GTRMagic]

Originally Posted by Chucky

And, according to Paul Little, the Toll Racing thing costs them nearly 2 million a year and he keeps doing it for corporate morale more than anything!

Is that $50 for the race car, and $1,999,950 for the corporate hospitality?

I would think that a transport company advertising its brand on a race car would want a quick pilot aboard, you know.. something about on time and in full deliveries and all that...

For $2m a year... the sponsorship funding direct to the team running the car... would be more than the commercial input from the title sponsor of each of the top 10 finishers in the last couple of seasons.

A Toll branded SBR Falcon... sounds good to me

[stmookeyj033]

I should have asked my old man, who works for a toll subsidary (QRX).

[retro]

..just wondering if LP has had a word with Mr Little about next year...just a thought??

[GTRMagic]

I understand the Toll operation has been linked to many teams in season 2006 and beyond, including Dynamik and BJR...

[Raglanparade]

Well when the Tratt franchise is eliminated at the end of the year due to lack of points, they would most likely take over the branding of the other Perkins cars.

[smokinJ]

i noticed it said former Dynamic CEO Mark Wild any one have any idea when Mark and his wife left Dynamik
I found Mark to be a realy nice bloke any was about the only one in the team that would take time out for the club members

[GTRMagic]

Team Dynamik announced Ian Greig (brother of cricketer Tony) as commercial guru at the start of this season

Perhaps the Toll story was sitting around a while?

[dynamik gal]

Originally Posted by smokinJ

i noticed it said former Dynamic CEO Mark Wild any one have any idea when Mark and his wife left Dynamik
I found Mark to be a realy nice bloke any was about the only one in the team that would take time out for the club members

Mark is Kieran's brother in law, and I agree Mark & Jenny are both lovely people. I doubt that they "left" the Dynamik stable as such, more so probably hired someone to look over Commercial Operations full time whilst they concentrated on their own businesses.

[smokinJ]

that explains alot as i also found Susan, Kierans wife to be lovely as well
she is also very down to earth
and is great to have a chat too

[cavvy]

Originally Posted by GTRMagic

I understand the Toll operation has been linked to many teams in season 2006 and beyond, including Dynamik and BJR...

Wouldnt Paul Little continue with Tratty in another area of racing - they always had great fun in the Porsche days.

The Toll sponsorship minus Paul Little is not big bucks.

[GTRMagic]

$100k a year wouldnt buy a postage stamp sized logo on some cars

[milktruck racin]

from what i understand is that toll don't put in all the supposed 2million, its like the kmart deal with their customers, toll is just the naming rights sponser and the rest of the funds for business using toll

[milktruck racin]

anyway, if by that article paul is worth 497 million, then GTR wouldnt that be just lunch money for him rather then dividens????????

[GTRMagic]

Originally Posted by milktruck racin

from what i understand is that toll don't put in all the supposed 2million, its like the kmart deal with their customers, toll is just the naming rights sponser and the rest of the funds for business using toll

The number isnt $2m either as I understand it... closer to $1.5m....

[pete55]

Will we see a Toll Ford in 2006?

[Razor]

Originally Posted by pete55

Will we see a Toll Ford in 2006?

Does this mean, that Tratt will get his BA Falcon back from Thexton racing?

[bondy_racing]

Originally Posted by Greg Barton

Does this mean, that Tratt will get his BA Falcon back from Thexton racing?

what?? Thexton's car is now owned by Britek and The ex Toll car is owned by Tony Evangelou.

[GTRMagic]

Originally Posted by pete55

Will we see a Toll Ford in 2006?

Entirely possible... they were within one bingle of a deal with FPR when Mr Besnard drove there, and there is noise around that FPR want to run 3 cars next season (with Mr Tratt a possible 4th to fill the spare pit boom...)

Or will the BOC car Mr Brede ran at Mallala carry new logos next year, and acquire a new pilot... in addition to the current cars?

Too many options, not enough driving talent

[Rombles1]

I thought the problem was too much driving talent/money, not enough licences? (If I can suggest that without getting into an argument about the actual level of talent....)

[Raglanparade]

There were whispers around the paddock last silly season about Ford Credit leaving FPR and the CAT branding across both cars.

Could a CAT/Toll FPR alliance form ?

I thought that Toll had links to Holden as they are responsible for moving all the Holdens between Factories and Dealerships ?

[Razor]

What, and get rid of the CAT logo on the bonett and replace it with a Toll Transport logo?

[milktruck racin]

well another rumor flooting around is that 1 M WHITE is looking at the franchise and possible toll funding as the family are in the trucking game