In a bid to deal with weak demand and boost its earnings potential in an increasingly volatile market, the world’s third-largest shipping line, CMA CGM, has recently entered into exclusive talks with Lentor Investments Pte – a wholly-owned subsidiary of Temasek Holdings – for its majority stake in Neptune Orient Lines (NOL), according to Bloomberg.
Song Seng Wun, an Economist at CIMB Private Banking in Singapore, said: “Temasek has been looking for a buyer for a while now, so if somebody comes along with a price they and NOL are comfortable with, consolidation may be good. It’s a very tough environment in terms of global demand and shipping rates – they have been bleeding.”
CMA CGM said the purchase of the stake “would contribute to the consolidation of the container shipping industry, at a time when scale is more critical than ever.”
The world’s leading shipping line recently said that it will be focusing much more on consolidation in order to effectively deal with a weak market, entrenched with overcapacity and low freight rates.
No agreement has yet been reached by CMA CGM for the acquisition of NOL and no assurance can be given that these discussions will lead to a definitive agreement.
CMA CGM will inform the public of any material developments in due time.
It has until December 7, 2015 to come to a definitive agreement of the offer to acquire NOL.