The share price of Neptune Orient Lines had leapt 5.8% by 14.00 hrs today on the back of news over the weekend that France’s CMA CGM had signed an exclusivity deal with Singapore’s flagship carrier over a possible sale.
Shares were trading at S$1.18 with a couple more hours trading time to go.
Temasek Holdings, Singapore’s sovereign wealth fund and majority shareholder in NOL, put its NOL stake up for sale earlier this year and on November 8 it was confirmed that the line was in talks with both CMA CGM and A.P. Moller-Maersk.
Now that an exclusivity agreement has been signed CMA CGM has until December 7 to close the deal.
The addition of NOL’s 541,521 slots would not only keep CMA CGM 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.
OCBC Investment Research said in a note Monday that even though it thinks CMA CGM could even be willing to pay a premium due to NOL’s technologically up-to-date and operationally efficient fleet, investors should be cautious of the deal falling through given the poor industry outlook.