CMA CGM has won the race to acquire Singapore line NOL, announcing a $2.4bn general cash offer for the company which has been accepted by NOL’s majority shareholders Temasek and its affiliates.
CMA CGM’s offer is for S$1.30 ($0.93) per share, 7.5 cents more than the price is closed at on Friday, and a 67% premium on NOL’s lowest trading price this year.
Rodolphe Saadé, vice-chairman of CMA CGM, commenting on the deal said: “This transaction will represent a significant milestone in the development of CMA CGM. Leveraging the complementary strengths of both companies, CMA CGM will further reinforce its position as a leader in global shipping with combined revenue of USD 22 billion and 563 vessels. By bringing together the know-how of both teams, the enlarged group will be even better positioned to provide premium services to its customers across all markets. At a time when the shipping industry is facing strong headwinds, scale is more critical than ever to capitalize on synergies and capture growth opportunities wherever they arise. I firmly believe CMA CGM will enable NOL to address the industry’s new challenges. We recognise the strategic importance of Singapore as a key hub for the maritime industry and we are committed to reinforcing its regional leadership.”
CMA CGM said that 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. The combined group would hold market shares from 7% to 19% on the routes on which it operates.
The new combined entity would have a capacity of 2,399 thousand teus and combined fleet of 563 vessels, with market share of around 11.5% and a turnover of close to $22bn.
CMA CGM says it plans to further leverage NOL’s historic legacy and reinforce its presence in Singapore, and it intends to retain and develop the APL brand due to its historic presence in the US.
The transaction will be financed by a combination of cash and financing provided by a syndicate of international banks. CMA CGM said intends to deleverage its balance sheet within 18 to 24 months through synergies and assets sales to the tune of at least $1bn, with the aim to reduce debt gearing ratio to below 0.8 times.
Saade, speaking in a press conference this afternoon, said he would push to shift APL out of the G6 alliance to CMA CGM’s Ocean3 alliance with UASC and China Shipping. Saade also said CMA CGM would be shifting traffic from other regional hubs to Singapore – a likely blow to Westports in Malaysia’s Port Klang, the French line’s current main Southeast Asian hub.
Saade also said CMA CGM would consider a listing once integration with NOL had been complete – with Singapore as a possible listing destination.
On further acquisitions, Saade said: “There is always appetite but our stomach will be full with NOL.”