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 Neptune Orient Lines Limited
NOL confirms talks with CMA CGM and Maersk
by Lloyds Loading List

Singapore’s Neptune Orient Lines Limited has confirmed the company is in “preliminary discussions” with both CMA CGM and A.P. Moeller-Maersk separately about a sale of the business to either of the European shipping giants.

Reports emerged that CMA CGM was carrying out due diligence with a view to taking over the Singapore line, which major shareholder Temasek put up for sale earlier this year. Maersk was also thought to be in discussion, but not at such an advanced stage.

NOL stated in a release issued to the Singapore Stock Exchange that the company has a duty to assess all options to maximise shareholder value and improve its competitiveness.  The statement went on to say that NOL had a duty to assess all options to maximise shareholder value and improve its competitiveness.  NOL stated that there is no assurance that discussions will result in a definite sale or an offer made, but it remains no secret that Temasek has been keen to offload the struggling carrier.

According to recent reports in Bloomberg, CMA CGM has made a preliminary offer for NOL, citing “people with the knowledge” of the talks. It reported that that Marseille-based CMA CGM was now conducting due diligence, though it had not been granted exclusivity.

Maersk is also in talks about the potential acquisition of Neptune Orient, although the discussions are reportedly less advanced.  Speculation about the future of NOL and its principal operating brand, APL, has been building since the group sold its logistics arm APL Logistics earlier this year to Kintetsu World Express. Following speculation last week, shares in NOL gained 6.6% in Singapore trading on Friday, while Maersk shares rose 2.4% at the close in Copenhagen.

Bloomberg said that acquiring Neptune Orient would help consolidate CMA CGM’s ‘number 3’ position in container shipping as it competes with market leaders Maersk and Mediterranean Shipping Co. Neptune Orient’s APL container unit has a 2.7% market share, while CMA CGM controls 8.9% of the market, according to data from industry consultant Alphaliner.

Hapag-Lloyd also considered teaming up with NOL, and analysts earlier this year also suggested a possible merger of APL with Hong Kong’s OOCL, but questioned whether anyone would buy a loss-making carrier in the current market.  In a bid to ease pressure on its troubled balance sheet, NOL sold APL Logistics for $1.2bn to Kintetsu World Express (KWE) earlier this year. But rumours that the largest line in Southeast Asia has discussed merging with rivals to boost its scale have continued to circulate in shipping circles. In July, the line moved to quash reports that its majority owner, Singapore state investment company Temasek, was looking to divest its controlling 65% stake in NOL.

Source: Lloyds Loading List, November 2015

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