NOL’s potential deals – reading between the lines

NOL’s wording in its press announcement today does seem to confirm the press reports last week of a potential sale of NOL/APL. Without knowing any details, it would seem things could be coming together for a potential reverse Hapag deal of a merger that was attempted from NOL’s side a few years back. If this is the road that is being considered, Hapag is certainly in a very different position this time:

  1. It has grown itself through its recent CSAV/VAPORES deal;
  2. It is again on the verge of an IPO/spin out;
  3. Shareholders may be more ready than ever to finally get to sell down their investments.

What will be most interesting will be the value placed on NOL/APL. Hapag bankers Goldman and Deutsche will be busy shuttling back between Hamburg and Singapore investors.

Alternately, bankers could almost as easily be crossing back and forth to HK-China to cross negotiate with OOIL or even potentially a CSCL or COSCO. The OOCL-APL tie-up has been floated a few times in the past, though it was always believed to be a weaker proposition for OOIL. But there could still be a few angles to explore again.

To be sure we could, in addition to potential Hapag or even OOIL deals, expect other potential combinations behind closed doors if higher bidders present themselves.

If it is to be as part of a or related to a Hapag IPO, then investors will have to be VERY careful they are not over-paying for the portion of the merger that will result in negative merger synergies which we have seen so often in the sector in the past. Valuing a business that can be shrunk post-merger is a very delicate operation.

Charles de Trenck

Charles de Trenck began his study of China in 1980 and eventually got in on the ground floor in China's equities boom of the early 1990s through work in Hong Kong and China shares. By the mid-90s he shifted to containerised trade, ports and shipping, eventually leading Citi to #1 rankings in Asia transport equities.
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