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CMA CGM to Acquire Neptune Orient Lines for $2.4B


French container shipping company CMA CGM said Monday that it has agreed to buy Neptune Orient Lines (NOL) for about $2.4 billion in cash, excluding debt.

CMA CMG will pay 1.30 Singapore dollars (or $0.93) per share for NOL, which is Southeast Asia’s largest container shipping firm. The strategic acquisition will result in combined revenue of $22 billion and a fleet size of 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,” Rodolphe Saadé, vice-chairman of CMA CGM, said in a press release. “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.”

According to The Wall Street Journal, the deal is the biggest sale in the shipping business since Maersk bought P&O Nedlloyd for around $3 billion in 2005.

The transaction has been unanimously approved and recommended by NOL’s board, while Singaporean investment-firm Temasek Holding and its affiliates—the company’s majority shareholders—have “irrevocably undertaken to tender all of their shares into the offer.”

“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,” said NOL CEO Ng Yat Chung, adding, “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 of portfolio management at Temasek, agreed: “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.”

CMA CGM is the world’s third largest container shipping company, with 469 vessels and a global market share of 8.8 percent. In 2014, it generated more than $16.74 billion.

The companies expect to receive approval from antitrust authorities by mid-2016.