Singapore and Marseille (France), December 7, 2015 – 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 price1 and a 33% premium1 to NOL’s 3 month
volume-weighted average share price to July 16, 2015.
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
1 Based 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.
Reinforcing CMA CGM’s position in the container shipping industry with strong complementary strengths
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 billion2.
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.
CMA CGM is looking forward to welcoming APL into CMA CGM’s world and intends to retain and develop the APL brand. With a
historic presence in the US, APL would add to CMA CGM’s operations in this region. The combination of CMA CGM and APL’s
highly skilled teams would enable the combined group to offer a premium service to all its customers.
The combined group’s customers would have access to an enlarged and well-balanced shipping coverage across all the strategic
trades of global commerce, and to an extended range of products and services.
Creating scale to enhance competitiveness
The industry is currently facing significant challenges with strong pressure on capacity and pricing. In this context, companies
need to enlarge their reach and coverage in order to benefit from economies of scale and deliver the full range of services to their
customers. In order to deliver sustainable performances in the mid-term, scale provides a strategic advantage.
The combination of the two groups would create synergies and enable the following competitive advantages:
· the optimization of vessels and occupancy rates on routes
· economies of scale in terms of purchasing costs, logistics costs and chartering costs
· a larger and more flexible fleet, allowing to deploy the most efficient vessels on any given route
Overall, the trade portfolio of the combined group would be better balanced, with increased resilience in times of market volatility.
CMA CGM has substantial experience in the integration of businesses and expects the enlarged entity to achieve significant
operational synergies.
Commitment to Singapore: Reinforcing Singapore’s leadership in the maritime and shipping industry
CMA CGM attaches significant importance to Singapore and the region for the deployment of its strategy in Asia. The combined
entity would reinforce Singapore’s leadership in the maritime and shipping sector as the city-state seeks to increase maritime
services and transportation volumes, including committing more volumes through Singapore. CMA CGM will also contribute to
reinforce Singapore as a center of excellence in the field of maritime activities as CMA CGM plans to use Singapore as a key hub
in Asia. In this regard, CMA CGM plans to establish its regional head office in Singapore. This consolidation of CMA CGM’s
longstanding presence in Asia in Singapore aims at providing efficient and quality services to customers in the region.
Following this transaction, CMA CGM intends to further leverage NOL’s historic legacy and reinforce its presence in Singapore.
Details of the transaction
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.