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Neptune Orient Considering Sale of APL Logistics

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October 16, 2014

Image: APL

Oct. 16 (Bloomberg) — CJ Korea Express Co., the country’s biggest courier delivery company, is considering an acquisition of Neptune Orient Lines Ltd.’s logistics business.

CJ Korea Express is weighing options relating to Neptune Orient’s APL Logistics Ltd. unit, including an acquisition or forming a strategic alliance, it said in an exchange filing today. Neptune Orient may start the sale of APL Logistics as early as the end of this month and the unit could fetch more than $1 billion should the entire business be sold, a person with knowledge of the matter said.

Neptune Orient, Southeast Asia’s biggest container line, is forecast to post a fourth straight annual loss this year as slowing economic growth and excess capacity hurts shipping rates. In the past two years, the Singapore-based company has sold its main office building and some vessels to cut costs.

Shares of Neptune Orient fell as much as 4.1 percent, the biggest intraday decline since November 2012, and closed 3.6 percent lower at 81.5 Singapore cents. CJ Korea Express rose 4.9 percent to close at the highest since at least 1975.

The company said in August that it is considering options for APL Logistics, including a sale or initial public offering. The unit accounted for 18 percent of sales last year.

Neptune Orient said today in an e-mailed statement there haven’t been any material developments on its review of the business and there’s no assurance a deal will be completed.

Consistent Profit

“The logistics business has been a consistent profit generator,” said Jon Windham, an analyst at Barclays Plc in Hong Kong. Companies with logistics business in North America, such as APL Logistics, will be attractive for investors as manufacturing gets decentralized from China, he said.

Neptune Orient reported a loss of $152 million in the first half, compared with a profit a year earlier. APL Logistics posted $32 million in core earnings before net finance, tax and exceptional items, while the container shipping business had a loss of $112 million.

Revenue from the Americas accounted for 63 percent of APL Logistics’s total $802 million in the first half of this year. Its business includes working with the automotive industry in North America.

CJ Korea Express has said it’s interested in growing its business outside the country and has been looking at acquisition opportunities.

(c) 2014 Bloomberg.

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