Toll plans job cuts at target Patrick

Toll Holdings, Australia's biggest freight company, plans to eliminate jobs at Patrick Corp if it succeeds with a A$4.7 billion ($5.1 billion) hostile takeover bid.

Toll will also conduct a three-month review of Patrick's businesses and merge the head offices of the two companies, Melbourne-based Toll said in documents sent to shareholders yesterday.

Toll made its cash and stock offer last month.

"As a consequence of this review, some employees may be made redundant," it said.

Toll is looking to deliver at least A$50 million a year in cost savings from buying Patrick. It also plans to reduce costs by combining head offices and making bulk purchase orders. The savings may total as much as A$65 million, or A$45 million after tax, in three years, it said.

Toll chief executive Paul Little is seeking to control the movement of goods in Australia from arrival at ports to final delivery and create the world's fifth-biggest freight handler.

Toll yesterday forecast earnings per share growth in 2005-2006 of 20 per cent if a takeover of Patrick succeeds.

Little plans to sell most of Patrick's controlling stake in Virgin Blue back to the airline's founder, Richard Branson, after record jet fuel prices forced Patrick to cut its profit forecast this year.

Toll said the acquisition will mean a one-time charge of A$25 million after tax to cover restructuring costs, and A$7 million after tax for rearranging its debt.

The takeover bid has raised antitrust issues. Toll is due to lodge an application to the Australian Competition and Consumer Commission this week for an informal clearance of the merger.

- BLOOMBERG