French-headquartered shipping line CMA CGM has entered into exclusive discussions with Neptune Orient Lines (NOL) to potentially acquire to third-largest container shipping company.
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Potential mergers are also not confined to the shipping industry.
“There is definitely a consolidation trend going on, “Esben Poulsson, president of the Singapore Shipping Association, told CNBC’s The Rundown”.
Shares of Singapore’s Neptune Orient Lines (NOL) rose as much as 5.4 per cent on Monday (Nov 23) on hopes the loss-making container shipping firm will soon be sold to a larger rival.
The Baltic Exchange’s main sea freight index, which tracks rates for ships carrying dry bulk commodities, hit a new all-time low on Friday, pulled down by a vessel glut and slowing industrial demand from China.
Another 1.3 million teu will be added to the global fleet in 2016, with over-capacity now tipped to exceed that during the global financial crisis in 2009, added Drewry. Neptune Orient, which helped cement Singapore’s status as a global trade hub, attracted takeover interest after simplifying its structure this year by shedding its $1.2 billion logistics unit.
NOL, whose ships operate under the APL brand, said that Temasek had granted CMA CGM exclusivity “with respect to a potential acquisition of NOL by way of pre-conditional voluntary general offer”.
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This came after China shipping giants Cosco Group and China Shipping Group are said to be in talks over a possible merger, Reuters reported in August, citing a source with direct knowledge of the discussion.
