SINGAPORE - Shipping line Neptune Orient Lines (NOL) has received an offer of $1.30 a share from France's CMA CGM.
The offer, which amounts to a $3.38 billion deal for some 2.6 billion shares, was announced by NOL in a filing to the Singapore Exchange on Monday (Dec 7) afternoon.
It represents a 33 per cent premium to NOL's three-month volume-weighted average share price to July 16.
Both NOL and France's CMA CGM, the third largest container shipping company in the world, confirmed last month that they were in exclusive talks for the buyout, which will be one of the largest in the industry.
CMA CGM was given until midnight on Monday, Singapore time, to complete its due dilligence on NOL and negotiate a definitive offer.
The acquisition will allow CMA CGM, which is private and family-owned, to "cement its position among the global leaders in the container shipping industry", said the statement.
"It will create a new global force in shipping, with a capacity of 2,399,000 TEUs, a market share of approximately 11.5 per cent, a fleet of 563 vessels and a combined turnover of approximately US$22 billion."
CMA CGM also aims to "expand and strengthen its presence in Singapore", reinforcing Singapore's leadership in the maritime and shipping sector as part of the enlarged group's strategy in Asia as it plans to use Singapore as a key hub in Asia and establish its regional head office here.
Mr Rodolphe Saadé, vice-chairman of CMA CGM, said in a joint press statement: "At a time when the shipping industry is facing strong headwinds, scale is more critical than ever to capitalise on synergies and capture growth opportunities wherever they arise."
The shipping giant has been facing mounting pressure to expand, given that two state-owned Chinese carriers, China Ocean Shipping Co and China Shipping Group Co, are in advanced talks to merge.
Analysts have agreed that the acquisition of NOL - South-east Asia's biggest shipping container firm - will help strengthen CMA CGM's presence where it is lacking, especially on the trans-Pacific routes.
NOL, which is 67 per cent owned by Singapore investment firm Temasek Holdings and a market capitalisation of $3.19 billion as at Dec 4, has been looking for a buyer for months.
The firm has high debt levels and has not been profitable in recent years, amid the downturn in global shipping. In May, it sold its logistics business, APL Logistics, for US$1.2 billion to Japan's Kintetsu World Express Inc.
"The combined market presence delivered by the transaction would achieve the scale needed to enhance competitiveness for NOL's operations and offer a clear and sustainable long-term direction for the combined entity," said NOL chief executive Ng Yat Chung. "The transaction would enable NOL to grow as part of a larger entity with the resources of the world's third largest container shipping line."
Added Mr Tan Chong Lee, head of portfolio management at Temasek: "We are supportive of this transaction as it presents NOL with an opportunity to join a leading player with an extensive global presence and solid operational track record.
"The combination of NOL and CMA CGM will create a leading shipping company that delivers reliable and efficient service to its customers. Their complementary strengths will yield mutually beneficial results. We also note and welcome the commitment of CMA CGM to enhance Singapore's position as a key maritime hub and grow Singapore's container throughput volumes."
NOL shares closed 2 cents or 1.7 per cent higher at $1.225 on Friday.
