CCM CGM Agrees To Acquire Neptune Orient Lines

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 su

CMA CGM has made a preliminary offer for Neptune Orient and is conducting due diligence, though it hasn’t been granted exclusivity, while discussions with Maersk are less advanced, people with knowledge of the matter said before Neptune Orient’s announcement.
CMA CGM has made a preliminary offer for Neptune Orient and is conducting due diligence, though it hasn’t been granted exclusivity, while discussions with Maersk are less advanced, people with knowledge of the matter said before Neptune Orient’s announcement.

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

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