Temasek to sell entire NOL stake for S$2.3b

Temasek to  sell entire NOL stake for S$2.3b
The world's biggest container ship Marco Polo at the "Burchardkai" in the harbour of Hamburg in this file photo. French shipping liner CMA CGM has announced the acquisition of Neptune Orient Lines. Photo: Reuters
Published: 4:09 PM, December 7, 2015
Updated: 12:30 AM, December 8, 2015

SINGAPORE — Temasek Holdings has agreed to sell its entire 67 per cent stake in Neptune Orient Lines (NOL) to France’s CMA CGM, the world’s third-largest container shipper, which today (Dec 7) announced a S$3.4 billion offer to buy the iconic Singapore shipping firm to expand its presence on trans-Pacific routes. 

In its voluntary general offer, CMA CGM will pay S$1.30 a share in cash for the 2.6 billion shares in NOL, 6 per cent above the last closing price on the Singapore Exchange, and a 33 per cent premium to the three-month volume-weighted average price to July 16. The offer comes amid a prolonged downturn in the global shipping market caused by overcapacity, slowing global growth and weak commodity prices, with NOL having posted a net loss of US$96 million for the July-to-September period, its worst in six quarters.

NOL’s board, after considering strategic options, is recommending CMA CGM’s offer, while Temasek has given an irrevocable undertaking to CMA CGM to tender all of its shares, worth about S$2.3 billion, in acceptance.

Mr Tan Chong Lee, Head of Portfolio Management at Temasek, said: “We are supportive of this transaction as it presents NOL with an opportunity to join a leading player with an extensive global presence and solid operational track record… Their complementary strengths will yield mutually bene-ficial results. We also note and welcome the commitment of CMA CGM to enhance Singapore’s posi-tion as a key maritime hub and grow Singapore’s container throughput volumes.” 

With a regional head office based here, CMA CGM plans to use Singapore as a key hub in Asia leveraging on NOL’s legacy tracing back to 1968 when it was started to help develop and support Singapore’s struggling economy.  

“We recognise the strategic importance of Singapore as a key hub for the maritime industry and we are committed to reinforcing its regional leadership … At a time when the shipping industry is facing strong headwinds, scale is more critical than ever to capitalise on synergies and capture growth opportunities wherever they arise,” said Mr Rodolphe Saadé, vice-chairman of CMA CGM.

The deal, subject to anti-trust clearances in the US, European Union and China, cements CMA CGM’s position in the global container shipping industry with a combined turnover of US$22 billion and a global market share of about 11.5 per cent.

When asked about the impact on NOL staff in Singapore, Mr Ng Yat Chung, CEO of NOL, said: “It is too early for us to comment on any manpower rationalization. If there is any such measure taken, employees will be adequately compensated.” Fewer than 1,000 of the 7,400 employees of NOL globally are based in Singapore, Mr Ng told TODAY. 

NOL has 180 offices in more than 80 countries and operates 94 vessels representing 618,000 twenty-foot equivalent units (TEUs) in fleet capacity. The combined capacity following the acquisition will be almost 2.4 million TEUs with a fleet of 563 vessels.

CMA CGM does not intend to preserve the listing status of NOL if it succeeds in acquiring more than 90 per cent of the company. Trading in NOL shares, which were halted today for the announcement, will resume tomorrow.