Third-largest shipping company CMA CGM has announced an all-cash voluntary conditional general offer (Offer) for all outstanding shares of Neptune Orient Lines Limited (NOL) other than those it already owns, controls or has agreed to acquire.
This news follows approvals by the relevant regulatory authorities in the European Union and China.
CMA CGM currently owns 10.5% of all NOL shares, and intends to delist and privatise NOL through the Offer. NOL’s majority shareholders (Temasek Holdings (Private) Limited and its affiliates), which own 66.78% of all NOL shares, will tender all of their NOL shares in acceptance of the Offer.
Maybank Kim Eng Securities Pte. Ltd. (MKES) has been appointed as the independent financial adviser (IFA) to advise the directors of NOL who are considered independent for the purposes of the Offer (Independent Directors).
The Offer Price is US$0.95 per NOL share in cash, which CMA CGM does not intend to increase.
The Offer provides NOL shareholders with an opportunity to realise their investment in NOL at a 49% premium to NOL’s unaffected share price on July 16, 2015 (1) and a 33% premium to NOL’s 3-month volume-weighted average share price prior to July 16, 2015.
CMA CGM believes that the acquisition of NOL would enable CMA CGM to reinforce its position as a leader in the container shipping industry, with a capacity of approximately 2.35 million TEU, a market share of approximately 11.7%, a fleet of approximately 540 vessels (2) and a combined annual turnover of approximately US$21 billion (3).
Leveraging the complementary strengths of the two entities, the combined group’s customers will have access to an enlarged and well-balanced shipping coverage across the strategic trades of global commerce, and to an extended range of products and services.
CMA CGM further believes that the combination of the two groups would also create scale to enhance competitiveness and deliver sustainable performance.
CMA CGM attaches significant importance to Singapore and the region for the deployment of its strategy in Asia. The combined entity would reinforce Singapore’s leadership in the maritime and shipping sector as the city-state seeks to increase maritime services and transportation volumes, including committing more volumes through Singapore.
CMA CGM will also contribute to reinforce Singapore as a centre of excellence in the field of maritime activities as CMA CGM plans to use Singapore as a key hub in Asia.
In this regard, CMA CGM plans to establish its regional head office in Singapore. This consolidation of CMA CGM’s longstanding presence in Asia in Singapore aims at providing efficient and quality services to customers in the region.
Kwa Chong Seng, Non-Executive Independent Chairman of NOL, said: “The Independent Directors, having considered carefully the fairness opinion rendered to the NOL board by Citigroup Global Markets Singapore Pte. Ltd., as NOL’s financial adviser in this transaction; the terms and conditions of the Offer, as well as the advice given and recommendation made by MKES as the IFA, concur with the recommendation of MKES in respect of the Offer.
“Accordingly, they recommend that NOL shareholders accept the Offer, unless NOL shareholders are able to obtain a price higher than the Offer Price on the open market, taking into account all brokerage commissions or transaction costs in connection with open market transactions.”
Rodolphe Saadé, Vice-Chairman of CMA CGM, said: “Six months after the announcement, and after receiving the relevant authorisations, CMA CGM today opens its Offer for NOL shares. We offer each and every NOL shareholder SG$1.30 [US$0.95] per share in cash.
“In a particularly challenging international context in the shipping sector, our Offer fully and fairly values NOL. We believe this is an attractive Offer for all shareholders, as it was for Temasek and its affiliates, which have committed to tender their 66.78% stake.”
Acceptances of the Offer must be received not later than 5.30 p.m. (Singapore time) on July 4, 2016, or such later date(s) as may be announced from time to time by or on behalf of CMA CGM.
(1) The closing price of NOL shares on 16th July 2015 (Unaffected Date) being the last full day of trading in NOL shares on the Singapore Exchange Securities Trading Limited (SGX-ST) immediately preceding the announcement by NOL on 19th July 2015 in relation to media reports regarding a potential sale of NOL.
(2) Based on information as at the end of the first quarter of 2016 of the CMA CGM group and the NOL group respectively.
(3) Based on information as at the end of the financial year in respect of 2015 of the CMA CGM group and the NOL group respectively.
Fact File: CMA CGM is a leading worldwide shipping group. Its 450 vessels call at more than 400 ports globally, across all 5 continents. In 2015, they carried 13 million TEU. With a presence in 163 countries, through its 426 agencies, the group employs 22,000 people worldwide, including 2,400 at its headquarters in Marseille, France.