Maersk Line not ruling out possibility of NOL deal

SINGAPORE — The world’s largest container-shipping company, Maersk Line, said talks with Neptune Orient Lines (NOL) could resume if the Singaporean liner’s potential acquisition by French group CMA CGM fails.

“It depends on the conditions, that’s for sure. But you have to look at it as ‘if there’s a viable deal space, we will of course look into it’,” Maersk Line’s chief operating officer, Soren Toft, said yesterday at a media roundtable.

Mr Toft was responding to a question on whether the company would still be interested if exclusive talks between NOL and CMA CGM do not go through.

NOL had announced over the weekend that it had entered exclusive talks with the French company for its potential sale. CMA CGM has until Dec 7 to “complete customary due diligence on NOL and its subsidiaries and negotiate the definitive agreements to be entered in relation to the offer”, NOL said in the statement.

Its announcement came after a previous disclosure earlier this month that it was in preliminary discussions with both CMA CGM and Maersk over a potential acquisition.

When asked what went down during the discussions that resulted in CMA CGM clinching exclusive talks with NOL, Mr Toft declined to comment.

“I’m not going to comment on specific deals and talks that we had with NOL or any other party other than to say we have been in discussions … But generally, we’re always looking at opportunities for consolidating,” he said.

“We drive our organic growth strategy, but should there be an opportunity then we will always take a look at it. At the end of the day, it takes a willing seller as well, not only a willing buyer. So in that sense, this is just part of the repertoire that we’re looking at,” he added.

Mr Toft also said that the industry will “certainly benefit” if players consolidate amid the current challenging climate, but Maersk does not always have to be the one “activating” the process. “A consolidated industry where all other players are also participating in consolidation is also a good outcome,” he said.

With the tide not likely to turn for the container shipping industry going into 2016, Mr Toft said freight rates will continue on a “slow erosion” path due to the current supply-demand imbalance. He noted that by the first half of 2015, Maersk Line’s average freight rate had declined 1.9 per cent per annum since 2004.

Steps that the company is taking to reduce costs include cutting 4,000 jobs globally and closing down services to rationalise its networks, as well as forming partnerships to increase efficiency through the sharing of resources. He declined to elaborate on how many jobs would be cut in Singapore.

“We need to stay dynamic; that’s a reality in our business … I think it’s a thing of the past that Maersk is on our own,” said Mr Toft, adding that Maersk has been working with partners in most of the trade routes in its network.