Tranz Rail road freight business up for sale

By SIMON HENDERY

Tranz Rail is putting its road freight distribution business up for sale as it continues focusing on its line-haul operations.

The rail company said yesterday it was seeking expressions of interest for its Distribution Services Group business and had appointed investment bankers ABN Amro Craigs to handle the sale process.

Distribution Services Group has three major business units operating under the Tranz Link brand: Tranz Link Distribution, Tranz Link Refrigerated, and Tranz Link International. Tranz Link Distribution is a New Zealand-wide door-to-door freight business, Tranz Link Refrigerated runs a temperature-controlled trucking service, and Tranz Link International provides international freight forwarding from Australia and New Zealand.

The three businesses accounted for about 28 per cent of the company's revenue during the second half of last year.

Tranz Rail managing director Michael Beard said the move to sell Tranz Link was part of the company's restructuring towards what it saw as its core operations.

"We have completed a comprehensive review of all of Tranz Rail's activities and it is clear that the company's future lies with high quality line-haul rail," he said.

"We will be evaluating interest over the next couple of months while looking to finalise a sale in the next few months of this year after prospective purchasers have conducted due diligence."

Tranz Rail is also getting out of the passenger business. Last year it sold its Tranz Scenic and Auckland commuter services, and its Wellington commuter business is also on the block. The company put Tranz Link Refrigerated up for sale in late 2000 but decided to hold on to the business because it was not happy with the offers it received.

This time around, Australian logistics company Toll Holdings may be interested in bidding for Tranz Link.

Toll indicated this month that it might be interested in acquiring a New Zealand business. It already owns BHP's stevedoring and transport business in New Zealand and a majority stake in warehouse and distribution company Southern Distribution Centre.

Local freight companies Mainfreight and Owens Group are also likely to be interested in kicking Tranz Link's tyres.