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Toll managing director Paul Little has withdrawn a threat to drop his hostile takeover bid for Patrick Corp if the target company continues an "irrational" defence campaign that could erode the value of its assets.
Mr Little had planned to make the threat in a speech to shareholders at Toll's annual general meeting in Melbourne yesterday, but excised the comment at the last minute, perhaps fearing a backlash from investors keen for the deal to proceed.
However, the text of the speech, with the threat included, had already been released to the market via the Australian Stock Exchange.
"If Patrick acts irrationally, and as a result significantly reduces the value of its assets, Toll is prepared to allow the takeover offer to lapse," Mr Little planned to say, according to the published version of the speech.
Instead, he told shareholders that Patrick chief Chris Corrigan's defence tactics "have been quite bizarre and we believe will ultimately help the Toll bid succeed".
Patrick has rejected Toll's $4.3billion bid, made up primarily of Toll shares, arguing the company is worth $5.4 billion to $5.8 billion.
In a move Mr Little has described as a "sideshow" aimed at distracting attention from the bid, Patrick is attempting to have the Toll-Patrick joint venture rail company Pacific National split up over a contractual dispute.
"Mr Corrigan has tried to manufacture the appearance of a major dispute," Mr Little told the AGM.
"This has included a scurrilous and completely unjustified attack on Toll personnel who have contributed strongly to PN's growth and success since acquisition."
This was a reference to Toll director Mark Rowsthorn, whom Patrick has asked to stand down from the PN board following allegations he threatened and harassed PN chief executive Stephen O'Donnell.
Mr Little said he had underestimated how far Mr Corrigan would go to defend Patrick from takeover, but added he was confident Toll would succeed because it had the support of institutional investors and had the experience of executing 44 acquisitions over the past 16 years.
Mr Little said he expects Toll's share price to be boosted when the competition regulator released a statement of issues on the takeover, due by November 15.
Toll's bid is currently set to close on November 10, unless extended.
Mr Little also told shareholders that Toll had bought Queensland coal transport company Korn Bulk Haulage for $30million.
He said Toll expected to book an increase in net profit this year compared with 2004-05, but declined to give specific forecasts.
"Although Pacific National has underperformed compared to last year, due largely to the ongoing impact of drought-affected low grain volumes, trading since June 30, 2005, has remained particularly strong throughout the business, and results are well ahead of last year," he said.
Toll shares closed 27c higher at $12.65 yesterday while Patrick was up 7c at $6.77.
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