French firm CMA CGM is snapping up shares of local shipping firm Neptune Orient Lines (NOL) on the open market for less than its actual offer price.
About 3.68 million shares have been bought at $1.22 per share - eight cents below CMA CGM's cash offer of $1.30 a share - according to the French firm's joint financial advisers.
The purchase makes up 0.14 per cent of NOL, giving the firm a total of 0.42 per cent, according to a filing on Singapore Exchange yesterday.
Analysts note that investors are unlikely to change their view of NOL's valuation, and some shareholders could be happy to cash out now and reinvest funds elsewhere.
Mr Jason Hughes, head of CMC Markets Singapore, said: "NOL has been trading well below these current $1.20 levels for nearly two years; that says much more about the market valuation by investors."
The French firm's offer of $1.30 a share, which values NOL at $3.38 billion, is nearly 50 per cent higher than the share price had been months ago, when a buyout was first raised as a possibility.
While the offer by CMA CGM represents a marginal discount to book price, Mr Hughes noted that "the market had been applying a much larger discount, until the potential for a takeover actually surfaced".
Majority stakeholder Temasek Holdings, which owns 67 per cent, has already agreed to sell its shares.
Privately owned CMA CGM has said its aim is to delist NOL.
Singapore-based Rahul Kapoor, director of shipping research firm Drewry Maritime Services, said the company needs more than 90 per cent to get NOL delisted, so buying on the open market to get to that level makes sense.
Mr Hughes added: "There is nothing particularly unusual in this behaviour and there is risk on both sides. If the deal doesn't proceed, then we will see CMA CGM holding a much smaller stake in the business than they intend."
IG market strategist Bernard Aw added that the share price is still eight cents away from the target price, so there could be some more upside to come, "especially when regulators give the green light".
Even so, Mr Hughes noted how some shareholders could be happier selling their shares now to "reallocate funds to other investments" than wait for NOL's share price to improve if the deal does proceed.
Analysts are optimistic about the deal, which is seen as sweet relief for struggling NOL, given that it has racked up more than $1.5 billion in losses in the last four years.
Mr Aw said: "I believe the deal still has a good chance of making it through regulatory approval as the shipping industry is undergoing a period of consolidation amid weak demand and over-capacity.
"CMA CGM's pledge to reinforce Singapore's reputation as a maritime hub by plans to increase more shipping volumes through Singapore ports will also help to sweeten the deal."