Mainfreight buys 10pc stake in Owens to block Australian rival

By PAM GRAHAM

Mainfreight yesterday spent $5.47 million buying 10.1 per cent of rival logistics company Owens Group, and may buy more.

The move blocks any interest in Owens from Australia's Toll Holdings, which has a 10.1 per cent stake in Tranz Rail and a declared intention to expand in New Zealand.

Mainfreight bought the stake at 96c a share, a premium on Tuesday's closing price of 87c, from Owens family members. It bought in because the opportunity presented itself, said managing director Don Braid.

"We'll see what happens from here. We'll consider our options depending on what's available at what price," he said.

Nat Vallabh, from AMP Henderson which owns 10.7 per cent of Owens, said the move was part of an industry restructuring with a yet-to-be-determined outcome.

"It depends on who gets Tranz Rail's Distribution Services Group and whether Toll gets all of Tranz Rail or stays on 10 per cent," he said.

Toll, Mainfreight and Owens are chasing Tranz Rail's road transport and distribution business TranzLink. The sale is due by the end of June but Toll has said it is one of the issues it needs to consider before deciding whether to buy more of Tranz Rail.

Tranz Rail shares, at 88c yesterday, continued to trade above the 75c RailAmerica had planned to offer.

Owens yesterday reported a $2.8 million full-year profit on revenue of $438 million, down from $3.3 million last year.

Chairman Norman Geary said it had been "another demanding year" and its audit report would be qualified because of a difference of view on a $3.4 million deferred tax asset.

Mainfreight, which is twice the size of Owens on market capitalisation, will report on Friday. It is the largest player in the domestic "less than container load" market, with warehouses and a growing interest in international freight forwarding. It is seen as an efficient operator but Australian businesses have disappointed investors.

Owens has more than 200 owner drivers, an international freight forwarding business, shipping services, and container depots. Its managing director, David Ritchie, said he had not had talked with Mainfreight.

"I see them as another, and a new, shareholder on our register and it doesn't take us away from the strategic direction the board and I have for the group."

The company is selling its Hirepool business to a private equity venture for $46.4 million, slightly less than Owens' entire market capitalisation of $53 million.

Owens said it was working on acquisitions. It had agreed not to trade Tranz Rail shares while looking at TranzLink and was surprised this had not applied to all parties. Tranz Rail has said Toll Holdings did not give such an undertaking.

Geary said rail tracks were an essential ingredient to Tranz Rail and he was confident the Government would not be enticed into "dealing with individual parties on a basis of preference."