Neptune Orient Lines Limited (NOL) has agreed to sell its logistics business, APL Logistics, to Kintetsu World Express, Inc (KWE) for US$1.2 billion.
"This is a strategic move that will allow us to focus on improving our liner shipping business, while at the same time enabling APL Logistics to grow. The transaction will also strengthen our balance sheet and unlock value for our shareholders," said Ng Yat Chung, group president and CEO of NOL, on Tuesday.
"The proposed transaction with KWE is expected to provide APL Logistics with the opportunity to expand its business with the backing of a company with strong fundamentals and a commitment to grow in the logistics space. We believe that KWE has the ability and the ambition to continue APL Logistics' growth strategy."
According to NOL, the sale of APL Logistics follows a "robust and highly competitive process", and that the net proceeds of the sale will be applied to "strengthen its financial position, including to repay its borrowings".
The headquarters of APL Logistics will be retained in Singapore and KWE will run it as a separate unit, according to Satoshi Ishizaki, group president and CEO of KWE.
The deal is subject to NOL shareholder and relevant regulatory approvals.
Before the deal was announced, trading of NOL shares had been halted on Tuesday.