CMA CGM Goes “All In” on USD 2.4Bn NOL Acquisition

French container shipping giant CMA CGM has announced its “firm intention” to make an all-cash voluntary conditional general offer for all the outstanding shares of Neptune Orient Lines Limited (NOL), Southeast Asia’s largest container shipping company.

The offer extends to the shares other than those the company already owns, controls or has agreed to acquire, and follows the satisfaction and waiver of the pre-conditions set forth in the pre-conditional offer announcement dated 7 December 2015.

The offer price is SGD 1.30 in cash per NOL share,  a total of SGD 3.4 billion (USD 2.43 billion), which CMA CGM does not intend to increase.

Last week, CMA CGM said that it had received an approval from the Anti-monopoly Bureau of the Chinese Ministry of Commerce (MOFCOM) for its acquisition of NOL.

The Chinese regulatory body issued the green light after CMA CGM received a nod from the European Commission for the acquisition in April following a Phase 1 review. This approval was granted under the condition of NOL’s exit from the G6 shipping alliance, which has been already committed by NOL and CMA CGM. According to the company’s results for the first quarter of 2016, Indian authorities have also cleared the acquisition.

The announcement comes as CMA CGM plunges to a net loss of USD 100 million for the first quarter of 2016, a substantial drop from USD 406 million profit posted in the corresponding quarter in 2015.

The drop was mainly attributed to the current container shipping environment which is characterized by strong pressure on freight rates, with average revenue per TEU fall of 17.6%.

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