SINCE we reported last month (RG 6.03 p343) that Toll Holdings had bought a 6·1% stake in New Zealand’s Tranz Rail, the bidding battle has been fought fast and furiously. On May 23 RailAmerica withdrew its bid for Tranz Rail following due diligence investigations, at which point Toll decided to increase its stake to 10·1%. Tranz Rail shares fell 25% on the RailAmerica announcement, but quickly regained some ground to close at NZ$0·78 at the end of trading that day.

On May 29 Toll announced that it would be making a full takeover bid worth NZ$0·75 a share, valuing the company at NZ$158m, the same as RailAmerica’s earlier bid. Toll Managing Director Paul Little announced the lodging of a formal takeover notice on June 4, saying that discussions with Tranz Rail had begun.

Two days later, it was Tranz Rail’s turn to make an announcement. A June 6 statement revealed that the company had signed heads of agreement with the New Zealand government for a joint restructuring plan under which the government would pay NZ$75·8m to acquire a 35% stake in Tranz Rail. The government would also buy back the track, associated land lease, yards and other assets for NZ$1, together with other land surplus to Tranz Rail requirements for NZ$50m. The deal also saw the government pay a NZ$44m deposit on the network and assets.

Toll at once sought discussions with Finance Minister Dr Michael Cullen, but was rebuffed. On June 11 the Australian company issued a statement expressing its disappointment that Dr Cullen would not meet to discuss Tranz Rail. Not content with that, it announced on June 13 that it had increased its offer for Tranz Rail to NZ$0·95 per share and said that it ’remains willing to work in partnership with the government to find a mutual way forward. Our intention remains unchanged - Toll is seeking to own and operate Tranz Rail on a long-term basis, whether that includes tracks or not.’