Neptune Orient Lines Limited (NOL) has confirmed media reports that it is holding separate initial talks with two of the world’s biggest shipping firms over the buyout of Singapore’s largest shipping and transportation company.
In an emailed release on November 9, NOL said it “notes recent media reports and confirms that it is in preliminary discussions with CMA CGM SA and A.P. Moeller-Maersk A/S with respect to a potential acquisition of NOL.”
It added: “NOL has a duty to assess all options to maximise shareholder value and improve its competitiveness. From time to time, NOL enters into discussions on possible combinations involving NOL, while remaining focused on returning its core liner business to sustainable growth and profitability.
“There is no assurance that any such discussions will result in any definitive agreement or transaction, or that any offer for NOL will be made or as to the terms on which any such offer might be made.”
The notice was signed November 7, 2015 by company secretaries Looi Lee Hwa and Wong Kim Wah by order of the company’s board.
NOL, which helped cement Singapore’s status as a global trade hub and Southeast Asia’s biggest box carrier through its container shipping brand, APL, has been posting consecutive losses over the past four years amid continued unfavorable shipping conditions marked by weak market demand, overcapacity, and eroding freight rates.
Last month, it reported a third quarter net loss of US$96 million compared to a net loss of $23 million in the same quarter last year. The group posted a third quarter 2015 core EBIT loss (earnings before interest, taxes and non-recurring items) of $66 million versus a core EBIT of $21 million in the same quarter last year.
NOL group president and CEO Ng Yat Chung attributed the third quarter’s negative performance to “the absence of the traditional third quarter peak season in Europe and North America [which] led to severe freight rates erosion in major trade lanes.”
The company, whose parent corporation is Singapore’s state investor Temasek Holdings, already sold off earlier this year its logistics division for US$1.2 billion to Kintetsu World Express Inc., a Japanese freight forwarder, and has been reportedly looking for buyers of its other holdings.
There are reports that Marseilles-based CMA CGM has pitched a preliminary offer of S$2.7 billion to NOL, while Maersk’s discussions are less advanced.
