The Chess Game Begins

The big end of town looks set to be seeing a number of changes and new moves as the larger transport companies jostle for market power. With the announcement telling the world Linfox is buying a large number of shares in K&S Corporation, it looks like the transport landscape is going to see some major changes in 2016.


Linfox and K&S are not the only big boys involved. Moves by Brookfield, and now, more intriguingly, Qube to takeover Asciano, including the Patrick organisation, look set to see more changes in the larger logistics concerns.


Linfox  3


The past five years have seen a stable environment for the larger transport companies of Australia. The period before this had seen the disruption caused by the unrelenting growth of the Toll Group, taking over industry icons like Finemores and then entering a long and drawn out battle for Patrick Corporation.


After the dust settled the industry saw Toll as the biggest player, with its eyes on Asia and global growth, stabilise into big corporation. Linfox consolidated and has grown with some small acquisitions. The death of Alan Scott saw changes take place in the various arms of his different enterprises. This culminated in Scott Corporation folding into the ASX listed K&S Corporation and bringing all of the disparate Scott businesses under one publicly listed entity.


The move by Linfox this week, when the privately owned company popped up onto the ASX’s radar, when the K&S share price jumped, saw a large number of its shares were traded. The price rose from $1.025 earlier in the day, to $1.20.


The ‘please explain’ from the stock exchange saw K&S release the figures. On December 11 Linfox became the proud owner of 7,970,043 shares in K&S, buying the shares under the auspices of two separate entities, but making Linfox the ‘holder of relevant interest’. All of this at the price of just$6,778,244.


This means Linfox now controls 6.62 per cent of the voting power in the shareholder group. It is unlikely, the Linfox organisation is investing its money in K&S purely because it sees it is a good investment. Six per cent holding is often a good starting point for attempted takeovers or mergers.


At the moment, everyone is keeping their cards close to their chest. Linfox’s motives and strategy are not clear, this is likely to change as the pressure mounts and more shares change hands. Watch this space.