CMA CGM announces a pre-conditional voluntary general cash offer for NOL
CMA CGM, a global leader in container shipping, today announces a pre-conditional voluntary general cash offer for Neptune Orient Lines (NOL), Southeast Asia’s largest container shipping company (SGX: N03), subject to the satisfaction of the pre-conditions specified in such announcement. NOL’s majority shareholders (Temasek and its affiliates) have irrevocably undertaken to tender all of their shares in acceptance of the Offer.
Upon the satisfaction of the pre-conditions (namely, approvals from antitrust authorities), CMA CGM will launch an offer at a price of SGD 1.30 per share, which represents a 49% premium to NOL’s unaffected share price(1) and a 33% premium(1) to NOL’s 3 month volume-weighted average share price to July 16, 2015.
Commenting on this transaction, Rodolphe Saadé, Vice-Chairman of CMA CGM, said: “This transaction will represent a significant milestone in the development of CMA CGM. Leveraging the complementary strengths of both companies, CMA CGM will further reinforce its position as a leader in global shipping with combined revenue of USD 22 billion2 and 563 vessels. By bringing together the know-how of both teams, the enlarged group will be even better positioned to provide premium services to its customers across all markets. At a time when the shipping industry is facing strong headwinds, scale is more critical than ever to capitalize on synergies and capture growth opportunities wherever they arise. I firmly believe CMA CGM will enable NOL to address the industry’s new challenges. We recognise the strategic importance of Singapore as a key hub for the maritime industry and we are committed to reinforcing its regional leadership.”
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 would enable NOL to grow as part of a larger entity with the resources of the world’s third largest container shipping line.”
Tan Chong Lee, Head Portfolio Management at Temasek, said: “We are supportive of this transaction as it presents NOL with an opportunity to join a leading player with an extensive global presence and solid operational track record. The combination of NOL and CMA CGM will create a leading shipping company that delivers reliable and efficient service to its customers. Their complementary strengths will yield mutually beneficial results. We also note and welcome the commitment of CMA CGM to enhance Singapore’s position as a key maritime hub and grow Singapore’s container throughput volumes.”
Created in 1978 by Jacques Saadé, CMA CGM is the world’s third largest container shipping firm, with 469 vessels and a global market share of 8.8%. In 2014, the Group handled over 12 million TEUs and generated USD 16.74 billion in revenues. A founding member of the Ocean Three Alliance with UASC and CSCL, CMA CGM is present across 160 countries, with 22,000 employees in 655 offices, and has a fleet capacity of 1,781 thousand TEUs.
NOL is a leading shipping company operating under the American President Lines (APL) brand. In 2014, the company’s revenues2 reached USD 7.04 billion. Currently, NOL has more than 7,400 employees in 180 offices across more than 80 countries and operates 94 vessels, representing 618 thousand TEUs in fleet capacity.
This acquisition would enable CMA CGM to reinforce its position in the container shipping industry, and achieve the following:
capacity of 2,399 thousand TEUs and combined fleet of 563 vessels
market share of approximately 11.5% (vs 8.8% for CMA CGM and 2.7% for NOL)
combined turnover of c. USD 22 billion(2).
CMA CGM has a leading position on the Asia-Europe, Asia-Mediterranean, Africa and Latin America routes, whilst APL is strong along the Transpacific, Intra-Asia and Indian subcontinent shipping routes. The enlarged entity will strengthen its position on strategic shipping routes, especially in key markets such as United States, Intra-Asia and Japan, and will boast a balanced trade portfolio. Following the transaction, the combined group would hold market shares from 7% to 19% on the routes on which it operates.
The transaction is valuing NOL at a price to book ratio of 0.96 times. The transaction will be financed by a combination of available cash and bank financing provided by a syndicate of international banks.
Post-closing, CMA CGM intends to deleverage its balance sheet within 18 to 24 months through synergies and assets sales for an amount of at least USD 1 billion, with the aim to reduce debt gearing ratio to below 0.8 times.
The boards of NOL and CMA CGM have unanimously approved the terms of the proposed transaction, which is still subject to the approval of the relevant anti-trust authorities as set out in the Pre-Conditional Offer Announcement.
The offer will be launched without delay after approval of the relevant authorities which is expected by mid-2016.
About the CMA CGM Group:
CMA CGM, founded and led by Jacques R. Saadé is a leading worldwide shipping group.
Its 469 vessels call more than 400 ports in the world, on all 5 continents. In 2014, they carried 12.2 million TEUs (twenty-foot equivalent units).
CMA CGM has grown continuously, and has been constantly innovating to offer its clients new sea, land and logistics solutions.
With a presence in 160 countries, through its 655 agencies network, the Group employs 22,000 people worldwide, including 2,400 in its headquarter in Marseille.
Headquartered in Singapore, NOL is the largest shipping company listed on the Singapore Exchange. Its container shipping arm, APL, provides world-class container shipping and terminal services, as well as intermodal operations supported by leading-edge IT and e-commerce. APL offers transcontinental cargo shipping across Asia, North and South America, Europe, the Middle East, the Indian subcontinent and Australia through more than 80 weekly services at 160 ports worldwide.