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.”