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Toll Can Make A$1 Billion Freight Acquisitions, Macquarie Says

Toll Holdings Ltd., the largest Asia-Pacific logistics company, is able to spend A$1 billion ($925 million) on acquisitions to boost its global freight-forwarding operations, according to Macquarie Group Ltd.

“We regard Toll as the most likely player in the transport industry to undertake acquisitions, in keeping with its historical growth strategy,” analysts led by Russell Shaw said in a report today about Australian transport companies. Qantas Airways Ltd. may sell some freight operations, they said.

Toll, founded in 1888 as a coal-hauling horse-and-cart business, will likely make acquisitions in the next 12 months, Macquarie said. The Melbourne-based company has spent more than $6 billion in the past decade expanding its network in countries including China, Singapore and South Africa.

Chief Executive Officer Paul Little last year said he would focus on “bite size” purchases. Andrew Ethell, a spokesman for Toll, declined to comment today.

Freight-forwarding involves organizing the transportation of goods along with related activities such as customs clearance, warehousing and ground services. Toll gets about A$1.5 billion in annual sales from freight-forwarding, Macquarie said. The analysts reiterated an “outperform” rating on Toll.

Qantas may sell its stake in a freight venture with Australia Post, the government-owned mail service, which includes the Star Track Express and Australian Air Express businesses, according to Macquarie.

“We see some potential for an ongoing adjustment to Qantas’s freight strategy, which evolved under the previous management team,” Shaw wrote. Chief Executive Officer Alan Joyce “appears more concentrated on Qantas’s key flying and cargo businesses.”

While Sydney-based Qantas last week said it expects further “consolidation” in the global aviation industry, Macquarie’s Shaw sees “little near- or medium-term prospect of any involvement from the Australasian airlines.”

Qantas remains focused on ways to enhance value at all of its businesses including ventures, spokeswoman Olivia Wirth said by telephone today.

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