LONDON: France’s CMA CGM SA has entered exclusive talks with Neptune Orient Lines Ltd. to buy the Singaporean shipping company, which, if successful, would be one of the biggest tie-ups between container-shipping lines in recent years.
Neptune Orient Lines, or NOL, said Saturday that the company and its largest shareholder, Temasek Holdings Pte. Ltd., have entered into exclusive talks with the French container firm until Dec.7.
CMA CGM is the world’s third-biggest container shipper by capacity.
An acquisition of the $1.9 billion shipping company, which handles about 3% of global container volumes, would be the latest move among the world’s biggest container-shipping firms to cope with a downturn.
Earlier this month, NOL had disclosed it was in separate talks with both A.P. Møller-Mærsk A/S, the world’s largest container line by volume, and CMA CGM. The Journal reported earlier this week that CMA was emerging as the favorite to buy NOL.
In its statement, NOL said the exclusivity period will allow CMA CGM to conduct its due diligence and negotiate definitive terms of a potential agreement. The company, however, said there is no assurance that the talks would lead to an definitive offer.
Flagging global trade and overcapacity have hammered even the biggest shipping lines, forcing many into strategic alliances and rounds of cost-cutting. Many blame the industry’s fragmented nature for its current struggles. With few companies controlling more than 5% of the market, reducing the glut of ships is taking longer than many industry observers had anticipated.
Even so, consolidation has been rare. Several potential takeover targets, such as NOL, are controlled by deep-pocketed sovereign-wealth funds, which can afford to ride out the industry’s boom-and-bust cycle. Others are private or family-controlled outfits, which often take similar long-term views.
NOL’s Asia-to-Americas routes would fill a weak spot for CMA CGM, whose executives have said they are looking to expand into new territories.
