Ausdoc sale complicates matters

By DANIEL RIORDAN

Freightways Express' parent Ausdoc is negotiating its own sale, adding to the uncertainty surrounding Freightways' future ownership.

Ausdoc said yesterday that it had started negotiations with an unnamed party prepared to make a cash bid of at least A$2.13 ($2.51) a share for Ausdoc, which is listed on the Australian Stock Exchange. Ausdoc shares closed yesterday at $2.09.

Another unnamed party has been negotiating to buy Freightways for just over a week, with a deadline of May 29.

Like the party considering buying Ausdoc, it is one of several which have conducted due diligence on Ausdoc and Freightways over the past few months.

If the prospective Ausdoc buyer makes its offer before noon next Wednesday, Ausdoc's board is obliged to recommend shareholders accept, in the absence of a higher offer.

After then (and up to the expiry of the due diligence period on June 18), the board is under no such obligation.

Ausdoc has given its assurance it will not sell Freightways before May 29.

Speculation on Freightways' likely buyer has been rife on both sides of the Tasman, with Australia Post and Toll Holdings the leading contenders.

The Australian Financial Review reported last week that Australia Post was the likely bidder, in a move that would signal an Australasian expansion strategy by the postal giant.

Australia Post spokesman Gary Highland repeated what he told the Australian Financial Review - that his company did not comment on speculation.

Brambles has also been linked to Freightways, but the paper said Australia Post had bid more aggressively.

New Zealand industry sources say no one here is big enough to swallow Freightways, apart from NZ Post, which would be unlikely to make it past first base with the Commerce Commission.

NZ Post says it isn't involved.

Keith Tuffley, Australian managing director of UBS Warburg, which is handling both sales, said there were several scenarios surrounding the outcome of the two sale processes.

Ausdoc could agree to sell Freightways to party A and party B could bid for the whole company as a counter-bid. Or party B could lower its Ausdoc bid to reflect Freightways' sale, or walk out on the deal.

Tuffley said he expected that even if a Freightways sale was agreed, party B would continue with its bid for the whole company.

Ausdoc is also in sale discussions over its other subsidiaries, DX Express, Go Mail and AIM. Ausdoc owns all of Freightways' ordinary shares, but about 1500 New Zealanders own listed preference shares.