SINGAPORE-listed Neptune Orient Lines has suspended the trading of its shares Monday, the deadline for interested buyer CMA CGM to complete its due diligence on Southeast Asia’s largest container shipping company.
NOL and Lentor Investments, its single-biggest shareholder, have entered into an exclusivity agreement with French line CMA CGM for a potential acquisition of NOL. Lentor is a wholly-owned subsidiary of Singapore state investment firm Temasek Holdings.
CMA CGM has been granted shortly before midnight on December 7 to complete due diligence on NOL. AP Moller Maersk was also in preliminary discussions with NOL but it was the French line that entered into an exclusivity pact.
A combined CMA CGM and APL, NOL’s container shipping brand, would become the largest operator on the transpacific trades. The APL brand remains strong in the US, where it is often still referred to as American President Line.
NOL, which has a market value of S$3.2bn ($2.3bn), has been suffering from the downturn in the container shipping industry, posting annual losses since 2011 that ran up to a cumulative $1.2bn. Weaker-than-expected global trade, tonnage oversupply and the resulting drop in freight rates hit hard APL, eclipsing efforts to cut costs and increase operational efficiency.
CMA CGM said on November 22 that should the exclusive discussions lead to an agreement, the combination would contribute to the consolidation of the container shipping industry “at a time when scale is more critical than ever.”
“It would further reinforce CMA CGM as a global force in container shipping, leveraging the strong geographic and operational complementarity of both groups,” the French carrier said in a statement.
NOL shares have surged 46% since the beginning of the year amid speculation that the carrier’s assets would be sold off. In May this year, NOL completed the sale of APL Logistics to Japanese freight carrier Kintetsu World Express for $1.24bn.