Toll Group has announced it has entered into a formal agreement to sell its Global Express business to Allegro Funds, as the Japan Post owned transport group sort out a mire of issues and problems since the Japanese bought Toll several years ago.

Allegro Funds is a Sydney-based Australian private equity company which was founded by Chester Moynihan and Adrian Loader 16 years ago. Allegro currently has investments across a wide range of industries including healthcare, retail, industrial, education, food manufacturing, oil and gas, quick service restaurant, mining, flooring and tourism.

The sale of the Global Express business is expected to see Japan Post record net less than $10 million for the unit, while Allegro will assume the liabilities That is a mere fraction of the massive multi billion price Japan Post paid for the Toll Group.

The Allegro deal is astounding since Toll Global Express occupies such a prominent spot in the Australian logistics sector with revenues of  $3.2 billion for the 2020 financial year and a fleet of trucks, trailers and planes along with depots and operations around the country that  would it is estimated cost more than $AUD1 billion to replace.

The transaction will almost certainly result in another major write down for Japan Post in a litany of sorry following its buy in to Toll.

Since Japan Post bought the Toll Group stories have circulated about the many issues and problems the buyers found within Toll once they took control. The Australian Financial Review ran a series of stories last year about many of the issues the Japanese found and questioned the level of due diligence they carried out before purchasing the Australian transport company.

Toll Global Express includes Toll’s courier and express parcels arms, as well as its palletised, intermodal and shipping operations, and its New Zealand business. The biggest contributor is express parcels, which include same-day delivery and next-day delivery which generates better than $AUD1 billion in revenue each year.

Allegro was one of two bidders to lob a final offer for Toll Global Express at the end of March and is expected to inject around $AUD500 million into the Toll business, including debt funding as part of the transaction. Allegro has specialised in turning around difficult businesses.

The statement from Toll says that day-to-day operations will be unchanged, with customers continuing to work with existing Toll teams throughout the separation of Global Express from Toll Group.

Completion of the sale  will be subject to regulatory approvals and other conditions,  but is targeted to be completed by  30 June 2021.

Toll Group Chairman, John Mullen, said the sale marked an “exciting opportunity to build a profitable, sustainable company for the long term” by re-orienting around its key strengths and competitive advantage.”

“As an international business with a strong Australian heritage and significant Asian operations, the sale affords us the opportunity to invest in growing our operations across the Asia region while continuing to build on our strong competitive position in Australia – where it all began.”

Toll Group managing director, Thomas Knudsen, said the team would seek to create an even more compelling offering for customers by drawing on the “strength, scale and expertise we’ve built over 125 years through new and innovative solutions that help us grow with our customers in what is a very different world.”

“In undertaking the sale, we’ll retain the scale and expertise to manage complex supply chains across diverse markets in our key markets in Asia-Pacific.”