Japan Post's Toru Takahashi (L) and Toll Holdings's Ray Horsburgh (R)

Toll accepts Japan Post takeover bid promptly for $6.5b

You could have added over 40% value to your portfolio yesterday when the Japan Post offered a bid to take over Toll Group.

Toll Group accepted the offer promptly in order to avoid a speculative sell off and to honor its shareholder fiscal responsibilities. Japan Post which holds a comfortable $3 trillion in assets, with its postal, banking and insurance arm has been pushed into make higher risk and higher return divestments by Japanese Prime Minster Shinzo Abe.

The state run, Japan Post, is now in control of the branding and stake of the Australian Toll business and is likely to leverage across efficiencies and practices to improve the bottom line at Toll. Japan Post is looking to make further acquisition as its tradition investment strategies plunged in value as Abenomics of 2013 made the Japanese Government Bond (JGB) next to worthless.

Mr Abe even slashed the asset allocation of the Government Pension Investment Fund away from JGB’s from 60% to 35% and ordered a 25% foreign and domestic shares purchase goals for the fund.

We are long on this stock with expected earning to improve in 2016 onwards as we see Q on Q data to improve from here and a major shift in Toll operation practices to align with Japanese world famous lean practices that expect perfection as a minimum, which will ultimately be adding value to the bottom line.

We continue to buy stock under $8.50 where available.

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