NEPTUNE Orient Lines (NOL) said on Monday CMA CGM has offered to buy it for S$3.4 billion, at a 6.1 per cent premium over the last traded price. NOL's majority shareholder, state investor Temasek Holdings, fully supports the transaction and will be selling their shares to CMA CGM. Temasek owns two-thirds of NOL.
CMA CGM plans to offer S$1.30 per share in cash for the Singapore-based container liner. NOL shares were halted from trading. The total number of company shares are 2.6 billion, and these exclude other stock such as treasury shares and shares to be issued under company options.
The NOL acquisition by the world's third-largest container shipping company will mean a combined turnover of US$22 billion, and a fleet size of 563 vessels.
"At a time when the shipping industry is facing strong headwinds, scale is more critical than ever to capitalise on synergies and capture growth opportunities wherever they arise. I firmly believe CMA CGM will enable NOL to address the industry’s new challenges," said Rodolphe Saadé, vice-chairman of CMA CGM, in a press statement.
"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 plans to establish its regional head office in Singapore. The commitment of CMA CGM to enhance Singapore’s position as a key maritime hub and grow Singapore’s container throughput volumes was noted, and welcomed, said Tan Chong Lee, head of portfolio management at Temasek.
Ng Yat Chung, CEO of NOL, said the combined market presence delivered by the transaction would achieve the scale needed to enhance competitiveness for NOL’s operations and offer "a clear and sustainable long term direction for the combined entity".
The transaction valued NOL at a price to book ratio of 0.96 times, and the acquistion will be financed by a combination of available cash and bank financing provided by a syndicate of international banks.
CMA CGM intends to deleverage its balance sheet within 18 to 24 months through "synergies" and assets sales for an amount of at least US$1 billion. The aim is to cut debt gearing ratio to below 0.8 times.
NOL had signed an exclusivity agreement with France's CMA CGM for the takeover, valid till 11.59pm on Monday, for the firm to complete due diligence on NOL and negotiate definitive agreements on the offer. The NOL board has approved of this offer.
CMA CGM intends to delist NOL.
NOL closed Friday trading at S$1.225, up two cents.