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Patrick has signed a $32.5 million "alliance" deal with freight forwarding company FCL in what Toll Holdings described as an "uncommercial and desperate attempt" to frustrate Toll's hostile $4.5 billion takeover offer.
Patrick said yesterday it had formed a six-month agreement with FCL, which the competition regulator has already barred it from acquiring, to "jointly market combined services to existing and potential customers of Patrick and FCL".
The companies would offer integrated services in warehousing, international freight forwarding, shipping, wharf services, rail forwarding and domestic rail line haulage and hire each other's equipment including trucks and containers.
The agreement, which can be renewed for two further six-month terms, will also see the companies pool their sourcing of consumables and capital equipment to lower costs.
"The alliance will with immediate effect enable Patrick to provide its customers and customers of FCL with a better, more integrated service," company secretary William Hara said.
The alliance wasn't expected to have a material impact on Patrick's financial performance but would provide strategic benefits for the company, he said.
As part of the deal, Patrick has agreed to advance loans of $32.5 million to FCL for 18 months to allow it to refinance its existing borrowings and to provide working capital.
A Toll spokesman said the alliance "is destined to fail" and criticised Patrick for investing shareholders' money in "what appears to be an interest-free loan ... which Patrick itself acknowledges will produce no material financial benefit for Patrick shareholders".
"Interest-free loans are rare outside the charitable sector of the economy, and on the odd occasions they do arise in commercial activity, they are usually characterised as equity," he said.
The Australian Competition and Consumer Commission said in September it would oppose Patrick's proposal to acquire FCL on the grounds that it would reduce competition.
However, Patrick yesterday confirmed it still planned to acquire FCL's assets if it could gain ACCC approval.
The ACCC's objection stemmed from Patrick and Toll's joint ownership of rail business Pacific National, which Patrick is currently trying to split up while fending off Toll's takeover bid.
But Toll said Patrick's proposal was an attempt to "mimic Toll's strategy of combining land-based logistics with container stevedoring capabilities".
The Toll spokesman noted this was "a complete strategy U-turn" from Patrick's position in August, when the company rejected Toll's takeover offer on the grounds that it would cut shareholders' exposure to stevedoring in return for an increased exposure to the freight forwarding sector.
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