After much speculation Toll Group has entered into a formal agreement for the sale of the Global Express business.
The company formally announced today it would part with the division after Australian private equity group Allegro Funds agreed to purchase it.
Allegro Funds, as a transformation and turnaround private equity firm, applies capital, expertise and a hands-on approach to invest in businesses and reposition them for what it considers sustained long term growth.
The Global Express business provides express parcel, freight delivery and domestic forwarding services in Australia, and transport and contract logistics services in New Zealand.
Day-to-day operations will be unchanged in the meantime, with customers continuing to work with their existing Toll teams throughout the separation of Global Express from Toll Group.
Completion of the sale is subject to regulatory approvals and other customary closing conditions, with completion targeted for 30 June 2021.
Externally, Toll was careful to manage the optics, suggesting Japan Post’s divestiture of Global Express, which had reported a Q4 loss of $101 million in FY20, all the same marked a significant chapter in the business.
Toll Group Chairman, John Mullen, said the sale marked an exciting opportunity to build a profitable, sustainable company for the long term by re-orienting around its key strengths and competitive advantage.
“As an international business with a strong Australian heritage and significant Asian operations, the sale affords us the opportunity to invest in growing our operations across the Asia region while continuing to build on our strong competitive position in Australia – where it all began,” he said.
Toll Group Managing Director, Thomas Knudsen, said the team would seek to create an even more compelling offering for customers by drawing on the “strength, scale and expertise we’ve built over 125 years through new and innovative solutions that help us grow with our customers in what is a very different world.”
“In undertaking the sale, we’ll retain the scale and expertise to manage complex supply chains across diverse markets in our key markets in Asia-Pacific,” he said.
Knudsen said that the changing operating environment – including shifting supply chain dynamics, the rise of eCommerce, and the continued rise of Asia as an economic powerhouse – presented exciting opportunities for Toll’s customers and employees.
“We’ll draw on our core capabilities, global reach and sector expertise – as well as our trusted relationships with customers, governments and the broader supply chain industry – to forge a new and exciting future for the business”, he said.
The sale, according to Alan Beacham, President of the Global Express division, will further build upon positive trajectory of the business in its delivering operational improvements and serving customers.
“The sale is testament to how far we’ve come as a business, and it marks a new and exciting chapter for our people and for the customers we serve,” he said.
Allegro, which holds a majority stake in Australian Pizza Hut franchises and owns Best & Less, was ultimately favoured over American firm Platinum Equity.
As Toll’s Global Express division employs over 8000 workers, the Transport Workers’ Union has urged Allegro to invest in the long-term survival of the business citing the coming threat of gig economy entrants.
TWU National Secretary Michael Kaine said the union was ready to work with Allegro but in order for it to mantain its position as a safe, sustainable transport industry leader it would require significant investment on the part of the new ownership group.
“Just like Virgin’s new owners, the TWU will hold Allegro to account every step of the way to protect the interests of those who matter most: Toll’s customers, workers and all road users who depend on Toll operating a safe transport business,” Kaine said.
“Allegro must urgently invest in Toll given the threat being posed by gig economy entrants such as Amazon Flex, which sees workers using their own vehicles to transport goods with few minimum standards on safety and pay.
“Uber Freight and Amazon’s online freight system may also be on their way to Australia and the aggressive nature of these companies and their determination to undercut and wipe out competition will require Toll to lift standards, not lower them,” he said.