Box liners Neptune Orient Lines Limited (NOL) and CMA CGM have announced they have made an exclusive agreement to discuss until the first week of December the possible sale of Singapore-based NOL to the French shipping line.
In an email, NOL said that together with its largest shareholder, Lentor Investments Pte. Ltd., it has “entered into an exclusivity agreement with CMA CGM S.A. with respect to a potential acquisition of NOL by way of pre-conditional voluntary general offer.”
Under the agreement, NOL said they have given CMA CGM exclusivity until 11:59 p.m. (Singapore time) on December 7, 2015 “to complete customary confirmatory due diligence on NOL and its subsidiaries and negotiate the definitive agreements to be entered into in relation to the Offer.”
There is no assurance that such negotiation will result in any definitive agreement or transaction or that any offer for NOL will be made, said NOL.
For its part, CMA CGM said that should these discussions lead to an agreement, “such a 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,” it added.
Earlier, in a November 9 statement, NOL said that it was in preliminary discussions with both CMA CGM and Denmark-based Maersk Group regarding the sale of the company.
NOL, which helped cement Singapore’s status as a global trade hub and which is Southeast Asia’s biggest box carrier through its container shipping brand APL, has been posting consecutive losses over the past four years amid continued unfavorable shipping conditions marked by weak market demand, overcapacity, and eroding freight rates.
Last month, it reported a third quarter net loss of US$96 million compared to a net loss of $23 million in the same quarter last year. The group posted a third quarter 2015 core EBIT (earnings before interest, taxes and non-recurring items) loss of $66 million versus a core EBIT of $21 million in the same quarter last year.
NOL group president and CEO Ng Yat Chung attributed the third quarter’s negative performance to “the absence of the traditional third quarter peak season in Europe and North America [which] led to severe freight rates erosion in major trade lanes.”
The company, whose parent corporation is Singapore’s state investor Temasek Holdings, already sold off earlier this year its logistics division for US$1.2 billion to Kintetsu World Express Inc., a Japanese freight forwarder, and has been reportedly looking for buyers of its other holdings.
Photo: Todd Lappin
