CMA CGM to acquire NOL, reinforcing its position in global shipping

CMA CGM, a global leader in container shipping, recently announced a pre-conditional voluntary general cash offer for Neptune Orient Lines (NOL), Southeast Asia's largest container shipping company (SGX: N03), subject to the satisfaction of the pre-conditions specified in the announcement. NOL's majority shareholders (Temasek and its affiliates) 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% premium to NOL's unaffected share price and a 33% premium to NOL's 3 month volume-weighted average share price to July 16, 2015.

Created in 1978 by Jacques Saade, CMA CGM is the world's third largest container shipping firm, with 469 vessels and a global market share of 8.8%. In 2014, the Group handled over 12 million TEU and generated USD 16.74 billion in revenues. A founding member of the Ocean Three Alliance with UASC and CSCL, CMA CGM is present across 160 countries, with 22,000 employees in 655 offices, and has a fleet capacity of 1,781 thousand TEU.

NOL is a leading shipping company operating under the American President Lines (APL) brand. In 2014, the company's revenues reached USD 7.04 billion. Currently, NOL has more than 7,400 employees in 180 offices across more than 80 countries and operates 94 vessels, representing 618 thousand TEU in fleet capacity.

CMA CGM has a leading position on the Asia-Europe, Asia-Mediterranean, Africa and Latin America routes, whilst APL is strong along the Transpacific, Intra-Asia and Indian subcontinent shipping routes. The enlarged entity will strengthen its position on strategic shipping routes, especially in key markets such as United States, Intra-Asia and Japan, and will boast a balanced trade portfolio. Following the transaction, the combined group would hold market shares from 7% to 19% on the routes on which it operates.

CMA CGM is looking forward to welcoming APL into CMA CGM's world and intends to retain and develop the APL brand. With a historic presence in the US, APL would add to CMA CGM's operations in this region. The combination of CMA CGM and APL's highly skilled teams would enable the combined group to offer a premium service to all its customers.

The combined group's customers would have access to an enlarged and well-balanced shipping coverage across all the strategic trades of global commerce, and to an extended range of products and services. The industry is currently facing significant challenges with strong pressure on capacity and pricing. In this context, companies need to enlarge their reach and coverage in order to benefit from economies of scale and deliver the full range of services to their customers.

In order to deliver sustainable performances in the mid-term, scale provides a strategic advantage. Overall, the trade portfolio of the combined group would be better balanced, with increased resilience in times of market volatility. CMA CGM has substantial experience in the integration of businesses and expects the enlarged entity to achieve significant operational synergies.
 

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