CMA CGM Makes All-Cash Offer to Buy NOL

APL ship
NOL’s container shipping arm, APL, provides container shipping and terminal services across Asia, North and South America, Europe, the Middle East, the Indian subcontinent, and Australia, with more than 80 weekly services calling at 160 ports worldwide.

French container shipping company CMA CGM has launched an all-cash offer for all outstanding shares of Singapore-listed Neptune Orient Lines.

The offer price is SGD 1.30 in cash per NOL share, which CMA CGM called a fair value and an offer that the company does not intend to increase.

The offers comes after approval by regulatory authorities in the European Union and China.

CMA CGM currently owns 10.5% of all NOL and plans to delist and privatise NOL through the offer. NOL’s current majority shareholder is Temasek Holdings and its affiliates, owning 66.78% of the company.

“CMA CGM believes that the acquisition of NOL would enable CMA CGM to reinforce its position as a leader in the container shipping industry, with a capacity of approximately 2.35 million TEUs, a market share of approximately 11.7%, a fleet of approximately 540 vessels and a combined annual turnover of approximately US$21 billion,” CMA CGM said in a press release regarding the offer. “Leveraging the complementary strengths of the two entities, the combined group’s customers will have access to an enlarged and well-balanced shipping coverage across the strategic trades of global commerce, and to an extended range of products and services. CMA CGM further believes that the combination of the two groups would also create scale to enhance competitiveness and deliver sustainable performance.”

CMA CGM said the offer is reflective of its commitment to Singapore and its intentions to reinforce Singapore’s leadership in the maritime and shipping industry.

“CMA CGM attaches significant importance to Singapore and the region for the deployment of its strategy in Asia,” CMA CGM’s press release read. “The combined entity would reinforce Singapore’s leadership in the maritime and shipping sector as the city-state seeks to increase maritime services and transportation volumes, including committing more volumes through Singapore. CMA CGM will also contribute to reinforce Singapore as a center of excellence in the field of maritime activities as CMA CGM plans to use Singapore as a key hub in Asia. In this regard, CMA CGM plans to establish its regional head office in Singapore. This consolidation of CMA CGM’s longstanding presence in Asia in Singapore aims at providing efficient and quality services to customers in the region.”

Rodolphe Saadé, Vice-Chairman of CMA CGM, said the offer represents a fair and attractive value for NOL, especially considering the current challenges within the container shipping market.

“6 months after the announcement, and after receiving the relevant authorizations, CMA CGM today opens its Offer for NOL shares,” said Saadé. “We offer each and every NOL shareholder SGD 1.30 per share in cash. In a particularly challenging international context in the shipping sector, our Offer fully and fairly values NOL. We believe this is an attractive Offer for all shareholders, as it was for Temasek and its affiliates, which have committed to tender their 66.78% stake.”

NOL has recommended that unless shareholders have a better offer hiding up their sleeve, they should take the money and run. 

“The Independent Directors, having considered carefully the fairness opinion rendered to the NOL board by Citigroup Global Markets Singapore Pte. Ltd., as NOL’s financial adviser in this transaction; the terms and conditions of the Offer; as well as the advice given and recommendation made by MKES as the IFA, concur with the recommendation of MKES in respect of the Offer. Accordingly, they recommend that NOL shareholders accept the Offer, unless NOL shareholders are able to obtain a price higher than the Offer Price on the open market, taking into account all brokerage commissions or transaction costs in connection with open market transactions,” said NOL non-executive independent Chairman, Kwa Chong Seng.

CMA CGM, founded and led by Jacques R. Saadé and headquartered Marseille, France, is the world’s largest private-held container shipping group with 450 vessels calling at 400 ports around the world. In 2015, the company carried 13 million TEUs.

Acceptance of the offer is due by July 4, 2016.