Japan Post divests Toll’s US warehouse and trucking operations

Japan Post has sold the American warehousing and trucking operations of its Toll logistics subsidiary, marking the start of its retreat from its disastrous £5bn purchase of the Australian group five years ago. The price of the sale to Taylored Services, which Toll said did not include its US-based freight-forwarding operations, was not disclosed. The buyer is a California-based logistics company whose chief executive officer previously spent nine years at Toll. 

"The agreement involves the sale of Toll Global Logistics warehousing and trucking operations across the USA," said Toll in a statement. The deal, described by people with knowledge of the situation as relatively small in financial terms, draws a definitive line under Japan Post's aim of becoming a global logistics leader. The company touted these ambitions ahead of its 2015 initial public offering, when it tried to present itself as something other than an inwardly-focused, former state-owned behemoth.

Five years on, Japan Post is mired in an insurance mis-selling scandal and a collapse in the share prices of the holding company and its two listed subsidiaries, Japan Post Bank and Japan Post Insurance. Toll's other businesses include the Australia and Asia-focused Global Express courier services division. Japan Post's bankers, JPMorgan and Nomura, this week began the formal process of seeking a buyer for the struggling unit.

Global Express represented 41 per cent of Toll's group revenues for the year that ended in March and is described by bankers as offering "multiple levers for growth". It could fetch more than A£2.5bn (1.8£bn), according to estimates by analysts. Despite initial high hopes for the Toll acquisition, for which Japan Post paid significantly more than market expectations, the Japanese company was unable to make the acquisition work.

In 2016, just a year after buying Toll, Japan Post made a £3.8bn writedown on the acquisition, and analysts have warned that it could suffer further losses as it battles to secure a sale of all or parts of the business. People involved in Toll's international business said that in five years of ownership, the Japanese buyer had failed to address some of Toll's operational shortcomings. Potential buyers for Toll Global Express include private equity firms and global logistics groups such as FedEx, UPS and DHL.

People close to Japan Post said once the sale of Global Express was completed, the company would look to sell or find equity partners for other mainstay operations of Toll, which as a group made a loss of A£685.3m in the 12 months to March.

Japan Post confirmed the US sale without offering further details, but it is expected to retain Toll's global freight-forwarding operations, which represented 16 per cent of revenues last year.

The transaction would be completed by the end of 2020, Toll said.

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