Lin­fox snaps up Aur­i­zon haulage


Aur­i­zon has sold its loss-mak­ing Queens­land rail and road freight haulage busi­ness to Lin­fox af­ter a pre­vi­ous deal to sell the unit jointly to the truck­ing group and pri­vate eq­uity-owned rail ri­val Pa­cific Na­tional was blocked by the com­pe­ti­tion reg­u­la­tor.

While the Lin­fox pur­chase was given the green light yes­ter­day by the Aus­tralian Com­pe­ti­tion & Con­sumer Com­mis­sion, the watch­dog’s le­gal ac­tion against Aur­i­zon and Pa­cific Na­tional will con­tinue over al­le­ga­tions the pair reached an un­der­stand­ing that re­stricted com­pe­ti­tion in two deals worth $220 mil­lion.

The com­ple­tion of Lin­fox’s $7.3m ac­qui­si­tion also still hinges on the Fed­eral Court al­low­ing Aur­i­zon to di­vest the unit known as its in­ter­modal busi­ness.

The rail op­er­a­tor is now sub­ject to a tem­po­rary ban stop­ping it from clos­ing the freight busi­ness ahead of a court bat­tle set to be­gin on Novem­ber 19.

Aur­i­zon orig­i­nally an­nounced a deal in Au­gust last year to sell its Queens­land in­ter­modal unit to Pa­cific Na­tional and Lin­fox, off­load its Aca­cia Ridge in­ter­modal ter­mi­nal in Bris­bane to Pa­cific Na­tional and close its in­ter­state in­ter­modal busi­ness.

Aur­i­zon threat­ened to close the Queens­land busi­ness, which em­ploys 350 peo­ple, if the ACCC ob­jected to the Aca­cia Ridge deal.

ACCC chair­man Rod Sims did ob­ject to the deal and crit­i­cised the com­pany in Au­gust, say­ing its ag­gres­sive ap­proach to deal­ing with reg­u­la­tors had led to the court ac­tion.

“The ACCC did not con­sider that Aur­i­zon’s shut­down plans were ra­tio­nal given there were other op­tions,” Mr Sims said yes­ter­day. “The sale of the Queens­land in­ter­modal busi­ness demon­strates why the ACCC must al­ways ques­tion claims that busi­nesses will be shut if we don’t ap­prove a merger.”

Aur­i­zon said it planned to pro­ceed with the $205m sale of Aca­cia Ridge to Pa­cific Na­tional, as it pre­pared to de­fend the ACCC al­le­ga­tions.

Pa­cific Na­tional said it would chal­lenge the mat­ters in court.

“Pa­cific Na­tional is con­tin­u­ing to pur­sue its ac­qui­si­tion of the Aca­cia Ridge Ter­mi­nal. That mat­ter is to be heard by the Fed­eral Court in Novem­ber 2018,” a Pa­cific Na­tional spokesman said yes­ter­day.

“Pa­cific Na­tional re­futes the al­le­ga­tions and will be vig­or­ously de­fend­ing the pro­ceed­ings com­menced by the ACCC.”

If the Lin­fox deal pro­ceeds, Aur­i­zon ex­pects to in­cur $35m in pre-tax losses re­lated to as­set write­downs. It will pro­vide a 10year bulk haulage ser­vice with the lo­gis­tics com­pany as part of the trans­ac­tion.

Aur­i­zon was stem­ming its losses and pro­gres­sively re­solv­ing its is­sues, Mac­quarie said in a note to clients. “The out­stand­ing is­sues re­main the sale of Aca­cia Ridge and res­o­lu­tion of the UT5 (op­er­a­tional un­der­tak­ings) out­come, with clar­ity on this mat­ter late in Oc­to­ber,” Mac­quarie said.

“Broader coal vol­umes are soft but Aur­i­zon through new con­tracts should be able to mit­i­gate some of that drag.”

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