CMA CGM, a global leader in container shipping, announced a pre-conditional voluntary general cash offer for Neptune Orient Lines (NOL), Southeast Asia’s largest container shipping company, subject to the satisfaction of the pre-conditions specified in such announcement. NOL’s majority shareholders have irrevocably undertaken to tender all of their shares in acceptance of the Offer.
Upon the satisfaction of the pre-conditions (namely, approvals from antitrust authorities), CMA CGM will launch an offer at a price of SGD 1.30 per share, which represents a 49 percent premium to NOL’s unaffected share price and a 33 percent premium to NOL’s 3 month volume-weighted average share price to July 16, 2015.
Commenting on this transaction, Rodolphe Saadé, vice-chairman of CMA CGM, said: “This transaction will represent a significant milestone in the development of CMA CGM. Leveraging the complementary strengths of both companies, CMA CGM will further reinforce its position as a leader in global shipping with combined revenue of USD 22 billion2 and 563 vessels. By bringing together the know-how of both teams, the enlarged group will be even better positioned to provide premium services to its customers across all markets. At a time when the shipping industry is facing strong headwinds, scale is more critical than ever to capitalize on synergies and capture growth opportunities wherever they arise. I firmly believe CMA CGM will enable NOL to address the industry’s new challenges. We recognize the strategic importance of Singapore as a key hub for the maritime industry and we are committed to reinforcing its regional leadership.”
Ng Yat Chung, CEO of NOL, said: “The combined market presence delivered by the transaction would achieve the scale needed to enhance competitiveness for NOL’s operations and offer a clear and sustainable long term direction for the combined entity. The transaction would enable NOL to grow as part of a larger entity with the resources of the world’s third largest container shipping line.”
Editors Insight: Overcapacity continues to hammer the container shipping industry, which is driving carrier consolidation. Will this change when the Post-Panamax ships start crossing the expanded canal sometime in the spring of 2016?
Drewry’s Global Supply/Demand Index — a measure of the relative balance of vessel capacity and cargo demand in the market where 100 equals equilibrium — fell to 91 in 2015, its lowest level since the recession-ravaged year of 2009.
Neil Dekker, Drewry’s director of container shipping research, warned last month that the container shipping industry is in the midst of an over-capacity crisis which will worsen next year. 12-7-15 By Elliot Maras