<p>Patrick Corp will have to maintain FCL as a stand-alone operation until Pacific National has been divided, and could still have to sell off rail assets if a divided Pacific National fails to turn into competing line haul capacity for other forwarders. </p> <p>The Australian Competition and Consumer Commission has given Patrick – which is also due to release its formal target statement early next Tuesday — the green light to execute its $142m option to buy FCL.</p> <p>The ACCC’s change of mind followed the commercial split of Pacific National which Patrick is now seeking, and the new line haul rail operators which are likely to enter the east-west market. </p> <p>But the commission warned that if a newly formed Patrick Rail failed to offer competition to Pacific National, it would keep "complete discretion to require the divestiture of assets by Patrick".</p> <p>This could include resale of FCL, and any other assets "that the Commission considers would promote a choice in intermodal rail line haul services for third party rail freight forwarders". </p> <p>The commission has also told Patrick that it must maintain FCL "so that it can be sold by Patrick in the same condition it was when acquired by Patrick". </p> <p>The commission said this was because it could take up to two years to split Pacific National, and to preserve Toll’s earlier promise that it would sell FCL on if it were to take over Patrick itself. </p> <p>The Toll offer is due to close on Friday, April 28, just over two weeks away, with Patrick due back into the Federal Court the following Monday morning to seek an overturning of Toll’s undertakings to the ACCC on Pacific National, even if Toll has taken majority control of Patrick by then.</p> <p>Patrick’s formal response to Toll’s renewed offer will come first thing next Tuesday, when it posts its supplementary target statement with the ASX.</p> <p>This will contain new target valuations, and could also reveal if Patrick has any other partners or alliances to bring to its defence against Toll.</p> <p>Patrick is already in an operating alliance with FCL, which has several more new contracts in the pipeline. </p> <p>But Patrick is certain to press ahead with acquiring FCL so that it can eventually combine international container movements from its terminals with FCL’s domestic forwarding business, second largest after Toll with around half of Toll’s current estimated volumes. </p> <p>Patrick managing director Chris Corrigan said that Patrick had significant growth prospects in the forwarding market compared with Toll, because Toll was already "the dominant supplier in this market with no significant prospects for growth". </p> <p>But Toll managing director Paul Little said if Patrick bought FCL, it would knock $70m off the price Toll would pay for Patrick. Toll has hooked 10 cents of its cash offer to shareholders on Patrick not going through with its FCL strategy as a deterrent to Patrick’s defence plans. </p> <p>Mr Little also said that if Toll was forced to sell FCL after taking over Patrick, its market price would be less than Patrick had been prepared to pay, and the difference would have go to FCL’s present owners.</p> <br />
