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Toll synergies depend on ACCC view, says Corrigan

<p>Patrick chief Chris Corrigan has told weekend television that the synergies that Toll hopes to gain from taking over Patrick depend on how much the Australian Competition and Consumer Commission will allow elimination of competition. </p> <p>Mr Corrigan told the ABC’s <em>Inside Business</em> program yesterday (Sunday, September 18): "You can generate whatever synergies you like. </p> <p>"That comes down to how much competition you can eliminate, and that’s a function of how much the ACCC is going to opine on this matter. </p> <p>"But I could come up with hundreds of millions of synergies if I can eliminate enough competitors on the way." </p> <p>Mr Corrigan said experience with Pacific National’s takeover of Freight Australia showed what he called Toll’s "rather cavalier attitude that it has displayed to the ACCC may turn out to be a falsity". </p> <p>However, the major front in the takeover battle has become Pacific National, which could be broken up as a result of a dispute between the partners which predates the takeover. </p> <p>Analysts said a breakup of Pacific National would hit Toll hardest, because of the greater integration of its forwarding business with the co-owned rail operation. </p> <p>But Mr Corrigan on <em>Inside Business</em> widened his claim that Toll had been negotiating preferential deals with Pacific National for its forwarding arms.</p> <p>Patrick has put a resolution forward to the Pacific National board meeting on October 4, with the likelihood of further action if it is not passed. </p> <p>Mr Corrigan said a deal which gave Toll North a monopoly on Pacific National’s capacity in Queensland for 20 years, was drawn up by executives on the Toll payroll and given incentives under the Toll options scheme.</p> <p>"So you had a situation where basically Toll employees were negotiating with Toll and changing the deal that the board had agreed to," Mr Corrigan said. </p> <p>Patrick said the take-or-pay deal favours Toll North by up to $510m over 20 years after underestimating many rail operating costs in the business plan that was eventually adopted. </p> <p>Pacific National confirmed that two executives, Robert Jeremy and Mal Grimmond, had stood aside until the dispute was resolved.</p> <p>Mr Corrigan said Toll chief executive Paul Little was "out of touch" on the issue and that the breakup of Pacific National was clearly a serious option if Toll continued "to run and hide and obfuscate from a proper analysis of what’s gone on".</p> <p>However, Toll chief executive Paul Little said in media reports that Mr Corrigan knew that Toll-seconded executives were involved in the deal and suggested that Mr Corrigan was "desperate in trying to find something to attack us on". </p> <p>He also said the inquiry into the deal Mr Corrigan was calling for would be comprised entirely of Patrick representatives, making them "judge and jury".</p> <p>Toll earlier said the issue amounted to no more than $20m, and that Patrick had made the dispute public for tactical reasons. </p> <br />