|
News Code
70863
Copied
France’s CMA CGM in Exclusive Talks to Buy Neptune Orient Lines
TIN news: France’s CMA CGM SA has entered exclusive talks with Neptune Orient Lines Ltd. to buy the Singaporean shipping company, which, if successful, would be one of the biggest tie-ups between container-shipping lines in recent years.
Neptune Orient Lines, or NOL, said Saturday that the company and its largest shareholder, Temasek Holdings Pte. Ltd., have entered into exclusive talks with the French container firm until Dec.7.
CMA CGM is the world’s third-biggest container shipper by capacity.
An acquisition of the $1.9 billion shipping company, which handles about 3% of global container volumes, would be the latest move among the world’s biggest container-shipping firms to cope with a downturn.
Earlier this month, NOL had disclosed it was in separate talks with both A.P. Møller-Mærsk A/S, the world’s largest container line by volume, and CMA CGM. The Journal reported earlier this week that CMA was emerging as the favorite to buy NOL.
In its statement, NOL said the exclusivity period will allow CMA CGM to conduct its due diligence and negotiate definitive terms of a potential agreement. The company, however, said there is no assurance that the talks would lead to an definitive offer.
Flagging global trade and overcapacity have hammered even the biggest shipping lines, forcing many into strategic alliances and rounds of cost-cutting. Many blame the industry’s fragmented nature for its current struggles. With few companies controlling more than 5% of the market, reducing the glut of ships is taking longer than many industry observers had anticipated.
Even so, consolidation has been rare. Several potential takeover targets, such as NOL, are controlled by deep-pocketed sovereign-wealth funds, which can afford to ride out the industry’s boom-and-bust cycle. Others are private or family-controlled outfits, which often take similar long-term views.
NOL’s Asia-to-Americas routes would fill a weak spot for CMA CGM, whose executives have said they are looking to expand into new territories.
NOL, which is 65% owned by city-state sovereign-wealth fund Temasek has been looking for a buyer for months. The company reported a $96 million loss in the third quarter and sold its profitable logistics business, APL Logistics Ltd., for $1.2 billion to Kintetsu World Express Inc. in May.
CMA CGM faces pressure to expand as two state-owned Chinese shipping giants, China Ocean Shipping Co. and China Shipping Group Co., enter advanced talks to merge. A combination would create the fourth-biggest global shipping line—just behind CMA CGM—and would likely reduce the French company’s market share in Asia, analysts say.
Neptune Orient Lines, or NOL, said Saturday that the company and its largest shareholder, Temasek Holdings Pte. Ltd., have entered into exclusive talks with the French container firm until Dec.7.
CMA CGM is the world’s third-biggest container shipper by capacity.
An acquisition of the $1.9 billion shipping company, which handles about 3% of global container volumes, would be the latest move among the world’s biggest container-shipping firms to cope with a downturn.
Earlier this month, NOL had disclosed it was in separate talks with both A.P. Møller-Mærsk A/S, the world’s largest container line by volume, and CMA CGM. The Journal reported earlier this week that CMA was emerging as the favorite to buy NOL.
In its statement, NOL said the exclusivity period will allow CMA CGM to conduct its due diligence and negotiate definitive terms of a potential agreement. The company, however, said there is no assurance that the talks would lead to an definitive offer.
Flagging global trade and overcapacity have hammered even the biggest shipping lines, forcing many into strategic alliances and rounds of cost-cutting. Many blame the industry’s fragmented nature for its current struggles. With few companies controlling more than 5% of the market, reducing the glut of ships is taking longer than many industry observers had anticipated.
Even so, consolidation has been rare. Several potential takeover targets, such as NOL, are controlled by deep-pocketed sovereign-wealth funds, which can afford to ride out the industry’s boom-and-bust cycle. Others are private or family-controlled outfits, which often take similar long-term views.
NOL’s Asia-to-Americas routes would fill a weak spot for CMA CGM, whose executives have said they are looking to expand into new territories.
NOL, which is 65% owned by city-state sovereign-wealth fund Temasek has been looking for a buyer for months. The company reported a $96 million loss in the third quarter and sold its profitable logistics business, APL Logistics Ltd., for $1.2 billion to Kintetsu World Express Inc. in May.
CMA CGM faces pressure to expand as two state-owned Chinese shipping giants, China Ocean Shipping Co. and China Shipping Group Co., enter advanced talks to merge. A combination would create the fourth-biggest global shipping line—just behind CMA CGM—and would likely reduce the French company’s market share in Asia, analysts say.