Toll Holdings and its senior management, led by Paul Little, have become adroit manipulators of the media and very skilled at milking the benefits from high media exposure.

And they are quick and attentive learners from the masters of milking all things corporate, the Lowy Family and its Westfield shopping centre and property group.

Here’s why.

Yesterday, in response to media stories about plans to hive off its ports and transport/rail businesses into a new company (a trust), the company issued this short statement:

Following media speculation this morning, Toll wishes to restate that it is continuing to undertake a strategic review of its structure and operations, consistent with Toll’s ongoing objective to maximise shareholder value and position the business for future growth.

No concluded proposal has yet been finalised. Toll anticipates finalisation of its review shortly, for presentation to the Toll Board. Once the Board has considered the review, the market will be advised as appropriate.

Note the use of the word “shortly”.

You’d be excused for thinking that something was happening, but not quite yet.

And then in the papers this morning (especially the Financial Review’s Chanticleer column) there was detailed information about the split and the thinking behind it.

Especially the news that Toll executive director, Mark Rowsthorn would run the new transport/infrastructure company, that Toll would only have a 5% stake and that there would be no management fees like, say Macquarie Bank or Babcock and Brown.

And then this ten page statement was issued to the ASX shortly before 9 am detailing the split and showing the AFR version to be pretty accurate:

Toll Holdings (Toll) announces an exciting restructure initiative which involves the separation of its transport infrastructure assets from its network and supply chain.

The strategic restructure creates two, significant market leading, ASX listed companies – Toll Holdings and Infrastructure Co – aimed at maximising shareholder value and positioning both companies for enhanced future growth in a global market.

Toll Managing Director Mr Paul Little said the restructure was a unique opportunity to allocate the assets and resources of the company to the maximum advantage of shareholders, employees and customers.

Each company will have its own, experienced management team with the capability and operational and financial resources to pursue growth options both in Australia and offshore. Both businesses will be operated separately, with independent Boards.

The restructure would see Mr Paul Little retain his position as Managing Director of Toll Holdings while Toll’s current Executive Director, Mr Mark Rowsthorn, would become the CEO of Infrastructure Co.

Toll has briefed the ACCC on the proposed restructure.

Toll has sought a waiver of the requirement of Toll to sell 50% of Pacific National. Toll has also sought a waiver of its obligations to make available the Starters Kit of rail assets, to divest the Toll vehicle transport business and its interest in the PrixCar business concerning pre-delivery vehicle inspection services and to implement the rail and port non-discriminatory regimes.

And there’s the key to the whole review. Toll doesn’t want to meet the undertakings it gave the ACCC at the time of the Patrick takeover earlier this year, proving right the forecast of former Patrick CEO, Chris Corrigan, that the undertakings were worthless.

What Toll wants is to have everything it bought from Patrick and everything it had before and split it into two companies, with Mark Rowsthorn, the son of the co-founder of Toll, Peter Rowsthorn, as head of the new company.

And even if it had only 5% of the new company (or trust) that will be enough to control it.

That’s how the Lowys expanded Westfield through a central company (Westfield Holdings) and then Westfield Property trust and the Westfield American Trust.

They had management control and small shareholding: the management control was enough. The trusts were folded into the Holdings company three years ago.

Management will come from Toll for all positions in the new company: all the old Patrick executives have either left or been forced out: no one is going to rock the boat. They all know each other very well.

It’s cynical, its makes a mockery of all undertakings given to the ACCC in takeovers and Graeme Samuel will probably fall for it.

No wonder Corrigan is building a small infrastructure fund with Kaplan Funds Management in Sydney, a company he has an interest in. It’s a rich area of pickings.

And no wonder he’s going to be based more and more out of Australia.

Peter Fray

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