One thing we can say about Neptune Orient Lines’ (NOL) likely winning suitor is they have blue hulls. My take is NOL, majority held by Singaporean sovereign wealth fund Temasek, is looking for a bidding war and while two bidders – Maersk and CMA CGM – are not bad, it was probably looking for more parties to come to the table.
NOL, which owns containerline APL, is up for sale – likely cost in the region of $2.5bn and has acknowledged that Copenhagen’s Maersk and Marseille’s CMA CGM are interested. Both companies have plenty of experience of mergers.
Nordea said earlier this week the attractiveness of NOL/APL lies in its intra-Asia and transpacific networks while Alphaliner warned APL’s attractiveness “has diminished significantly as it has been chronically unprofitable since 2009”.
Steadily losing market share in recent years, APL has seen its global capacity share fall to only 2.8% currently, compared to 4.2% in 2010, Alphaliner warned.
In a column from earlier this year I had the temerity in my headline to ask who would be mad enough to buy NOL. Well, two rather large organisations have stepped into the ring – neither of them exactly dummies.
In the light blue corner, we have Maersk, the undisputed heavyweight container champion of the world. For Maersk, NOL makes sense in that the Danish firm has the cash – on course to net $3.6bn this year alone, it knows and likes Singapore a great deal – the Lion Republic is Maersk’s largest office outside of Copenhagen. The NOL acquisition would also give it a very sizeable capacity cushion against its nearest liner rivals, MSC and CMA CGM. As an avowed conspiracy theorist last week’s announcements from Maersk Line on the nixing of up to 240,000 teu in newbuild options and 4,000 redundancies planned in the coming years only add fuel to the fire. Are these internal rationalisation plans taken with APL coming onboard in mind?
In the dark blue corner
Pummelled within an inch of its life a few years ago, France’s CMA CGM has got itself off the canvas and is now plotting its way back up the liner rankings. The addition of NOL’s 541,521 slots would not only keep it very much in touch with the two companies ahead of it, MSC and Maersk – it would also provide some much needed breathing space from potentially merging entities below, most notably Cosco and CMA CGM’s Ocean3 partner, China Shipping. If one reads NOL’s stock exchange announcement on its suitors, released on Saturday, you might discern CMA CGM is deemed the favourite. I am not so sure.