Photo: CMA CGM
(Bloomberg) — France’s CMA CGM SA is in talks to acquire Singapore container shipping company Neptune Orient Lines Ltd., as majority owner Temasek Holdings Pte seeks a buyer, people with knowledge of the matter said.
CMA CGM has made a preliminary offer for NOL, which has a market value of S$2.7 billion ($1.9 billion), two of the people said, asking not to be identified as the information is private. Marseille-based CMA CGM is now conducting due diligence, though it hasn’t been granted exclusivity, according to one of the people. Denmark’s A.P. Moeller-Maersk A/S is also in talks about an acquisition of NOL, though the discussions are less advanced, the people said.
A deal is unlikely to be struck soon, as the slumping shipping sector damps the appetite for aggressive bidding, two of the people said. Temasek, the Singapore state investment company that owns 67 percent of NOL, may not be willing sell its stake at a low price, they said.
Representatives for CMA CGM, NOL and Temasek declined to comment.
“We’ve always said that we will look at everything that comes up for sale in the market but our base strategy is to grow organically,” Maersk Chief Executive Officer Nils Smedegaard Andersen said in a phone interview Friday, declining to comment specifically on whether Maersk is looking at NOL. “In general we welcome any consolidation — that would only be healthy for the container line industry.”
NOL gained 6.6 percent to close at S$1.05 in Singapore trading. Maersk shares rose 2.4 percent in Copenhagen Friday.
The shipping company that helped cement Singapore’s status as a global trade hub is attracting takeover interest after simplifying its structure earlier this year by selling its $1.2 billion logistics unit. NOL, created in 1968 and now Southeast Asia’s largest container line, ran up $1.2 billion of losses in the last four financial years as sluggish global commerce and overcapacity ate into shipping rates.
Acquiring NOL would help consolidate CMA CGM’s No. 3 position in container shipping as it competes with market leaders Maersk and Mediterranean Shipping Co. NOL’s APL container unit has a 2.7 percent market share, while CMA CGM controls 8.9 percent of the market, according to data from industry consultant Alphaliner.
CMA CGM, founded in 1978, has a fleet of 467 vessels transporting 12.1 million twenty-foot equivalent units of cargo annually, according to its website.
Hapag-Lloyd AG, Germany’s biggest shipping line that started trading on the Frankfurt stock exchange on Friday, repeatedly flirted with the idea of teaming up with NOL. Billionaire stakeholder Klaus-Michael Kuehne said in an interview, which ran in Swiss newspaper Finanz & Wirtschaft in June, that combining the two companies would be “interesting,” though a challenge as NOL is “not in good shape.”
Shares in Hapag-Lloyd, the world’s No. 5 carrier, hovered slightly above its lowered issue price of 20 euros, giving it a market capitalization of 2.3 billion euros.
–With assistance from Klaus Wille and Kyunghee Park in Singapore, Francois de Beaupuy in Paris, Christian Wienberg in Copenhagen and Nicholas Brautlecht in Hamburg.
©2015 Bloomberg News
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