French shipping line CMA CGM has pledged to "increase its commitment" to Singapore and help reinforce the country's position as a leading maritime hub.
The reassurance came yesterday from the firm's vice-chairman, Mr Rodolphe Saade, who was speaking after its stunning $3.38 billion buyout offer for home-grown shipping firm Nepture Orient Lines (NOL).
Mr Saade, the son of the family-controlled firm's founder and chairman Jacques Saade, said that CMA CGM plans to shore up its Singapore links by establishing its regional head office here and using the country as a key hub in Asia.
"Singapore and the region are very important to our Asia strategy. We do believe they are key growth drivers," he noted, adding that the firm will "increase significantly" its volume at the ports here.
He said CMA CGM will also continue to develop NOL's container business under the APL brand.
Mr Saade told a briefing here yesterday that he hopes NOL's top management will stay on board.
He also noted that NOL and CMA CGM have been in talks over the buyout for a year, adding that the industry operates in a time where "scale is more critical than ever".
The acquisition marks the first and largest consolidation for the industry in recent years, as global shipping continues to be weighed down by slowing demand and severe overcapacity.
Analysts have pointed out that the acquisition of NOL, the largest shipping container firm in South- east Asia, will help strengthen CMA CGM's presence where it is lacking, especially on transpacific routes.
NOL chief executive Ng Yat Chung, who was also at the briefing yesterday, said the buyout would deliver "the scale that is required for NOL to succeed in the current climate and to help NOL get sustainable growth". The firm, on its own, would otherwise need "significant capital investments" to maintain its competitiveness.
Mr Ng acknowledged the sensitivities surrounding the sale of NOL, which was, after all, founded to support the growth of Singapore as a maritime centre.
But he added: "It has done very well. Today, it's a major maritime hub in the world... The change in ownership of NOL will not impair Singapore's continuing journey to be premier maritime hub."
Mr Ng also said it is "inevitable" that there will be some staff cuts as a result of the acquisition, but stressed that CMA CGM will honour any severance packages. NOL has more than 7,400 staff, with around 600 in Singapore.
Privately owned CMA CGM said it will delist NOL once the buyout is completed. It also plans to sell assets worth US$1 billion (S$1.4 billion) from the combined entity over the next 18 to 24 months to reduce debt.
Mr Ng said CMA CGM is likely to send a general offer to NOL shareholders in June next year.
NOL's majority stakeholder Temasek Holdings has given the acquisition the green light, adding it will tender all of its 67 per cent holding.
Mr Tan Chong Lee, head of portfolio management at Temasek, said in a statement: "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.
"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."
