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CMA CGM holds exclusive acquisition talks with Neptune Orient Lines

SINGAPORE's Neptune Orient Lines (NOL) has confirmed that it is in exclusive talks with CMA CGM over the possible sale of the company to the French shipping line.

NOL, whose ships operate under the APL brand, said on Saturday that it has, with its single biggest shareholder, Lentor Investments, a wholly owned subsidiary of Singapore's Temasek state-run investment fund, "entered into an exclusivity agreement with CMA CGM with respect to a potential acquisition of NOL by way of pre-conditional voluntary general offer".

The statement said that CMA CGM has been given until December 7 to complete a due diligence review and negotiate the definitive agreements for the offer.

"There is no assurance that such negotiation will result in any definitive agreement or transaction or that any offer for NOL will be made," the statement added.

If the deals go through, it would be one of the biggest acquisitions in the shipping container industry in years. Thee deal would bring the French line close in size to Mediterranean Shipping Company, the market number two.

NOL announced on November 7 that it was in talks with both CMA CGM and Denmark's shipping giant, AP Moller-Maersk over a potential sale.

Maersk declined to comment on why it had pulled out of contention to take NOL over, the Financial Times reported.

CMA CGM - which is private and controlled by the Marseilles-based founding Saade family - said that if the discussions led to an agreement the combination would contribute to the consolidation of container shipping at a time when scale was more critical than ever.

"It would further reinforce CMA CGM as a global force in container shipping, leveraging the strong geographic and operational complementarily of both groups," the company said.

According to Alphaliner, the Paris-based container shipping information service, APL controls 2.7 per cent of the world container shipping fleet, while CMA CGM operates 8.8 per cent. The combined company would be far closer than at present to MSC's 13.4 per cent of the world fleet. A merger would also help CMA CGM's Ocean 3 alliance - which includes China Shipping and United Arab Shipping, the market numbers seven and 15 - to compete more effectively. The 2M alliance of Maersk and MSC is the most powerful industry alliance, the FT report added.

NOL - which took over the US's APL in 1997 - is stronger than CMA CGM in routes between Asia and North America. The shipping line reported a US$95.6 million net loss for the third quarter, on revenue down 28 per cent to $1.21 billion.