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TOLL Holdings has warned it could take legal action to prevent unwilling takeover target Patrick pursuing a merger with freight forwarder FCL - a deal that has already been knocked back once by the competition regulator.
Toll described Patrick's continued discussions with FCL as a "rogue action" designed specifically to frustrate Toll's hostile $4.6 billion takeover offer.
"Toll will vigorously pursue all available and appropriate remedies under the law in relation to any attempt by Patrick to frustrate Toll's offer," a company spokesman said.
The Australian Competition and Consumer Commission said in September it would oppose Patrick's plan to acquire FCL on the grounds that it would lead to a substantial lessening of competition in the rail freight-forwarding market, due to Patrick's co-ownership of rail freight company Pacific National as a joint venture with Toll.
But PN's assets could be split up between Toll and Patrick in as little as 10 weeks, as a dispute over a contract between PN and Toll's Queensland operations has triggered resolution procedures that can lead to dissolution of the joint venture partnership.
The ACCC could look more favourably on a merger between Patrick and FCL if Toll was no longer connected to either company via the joint venture. But Toll said yesterday Patrick would destroy value for shareholders if it merged with FCL, which has raised the prospect of reopening talks with Patrick if Toll's takeover bid is unsuccessful.
"Toll considers that the reported offer price by Patrick for FCL of about $150 million, if correct, would be yet another example of Patrick significantly overpaying for an acquisition," a Toll spokesman said. "Toll believes that the FCL business is barely profitable."
Toll has sought to capitalise on the poor performance of discount airline Virgin Blue since Patrick acquired majority control in March, highlighting it as an example of poor decision-making by Patrick boss Chris Corrigan. Toll proposes to divest the majority of Patrick's 62.4 per cent stake in the airline as part of its takeover consideration, distributing 0.3 Virgin Blue shares per Patrick share as an in-specie dividend, in addition to 0.4 Toll shares and 75c in cash.
A Patrick spokesman said Toll should focus on its own bid.
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