France’s CMA CGM has approached banks to finance its potential takeover bid for Singapore’s Neptune Orient Lines Ltd (NOL), reports Bloomberg.
The world’s No. 3 container shipping company is in talks with banks including BNP Paribas SA, HSBC Holdings Plc and JPMorgan Chase & Co. for loans to back an offer for NOL.
As per take-over laws, CMA CGM should demonstrate it has sufficient financial resources before making a definitive bid for Neptune Orient, which has a market value of S$3.1 billion ($2.2 billion)
CMA CGM is the third largest container company in the world and has 8.8 per cent of market share according to container analyst Alphaliner.
NOL was started as Singapore’s national shipping line, and following a US$285 million merger in 1997 with American President Lines (APL), it has developed into a company with more than 6,000 staff across 80 countries.
Adding Singapore-based APL’s capacity to French carrier CMA CGM’s 1.79 million-TEU fleet would give the combined carrier an 11.5 percent share of global capacity, behind market leader Maersk at 14.7 percent with a 3 million-TEU fleet, and second-ranked Mediterranean Shipping Co. at 13.4 percent with 2.7 million TEUs.
Singapore’s state investment company, Temasek Holdings, which owns 67 per cent of NOL, put the shipping company up for sale in mid-2015 due to high debt levels and low profits.
CMA CGM has been given until December 7 to complete a due diligence review and negotiate the definitive agreements for the offer.
If acquisition talks between NOL and CMA CGM fail to progress, Maersk Line says negotiations with the Singaporean company could resume, Singaporean media reports.