Neptune Orient Lines was acquired by CMA CGM in 2016 for $3.4 billion, a move that marked a significant shift in the company's financial trajectory.
The acquisition allowed CMA CGM to expand its global reach and increase its market share in the container shipping industry.
Neptune Orient Lines reported a net loss of $1.1 billion in 2015, highlighting the financial struggles the company faced before the acquisition.
The company's financial woes were partly due to a decline in global trade and a surge in bunker fuel prices.
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NOL Sale and Merger
NOL made a US$825 million acquisition of American President Lines (APL) in 1997, adopting the APL name as the public brand name.
The merger was a strategic move to manage global supply chains, with APL Logistics established as a separate business unit in 2001.
NOL saw losses mount to US$460 million in 1998, but managed to sell off assets and become profitable again by 1999.
The company completed the divestment of its tankering businesses AET and NAS in 2003, to focus on core container shipping and logistics services.
Ng Yat Chung was appointed as CEO of NOL in 2011, replacing Ron Widdows.
APL Logistics was sold to Kintetsu World Express, Inc. for US$1.2 billion in 2015.
Temasek will tender its NOL shares to CMA CGM in 2016, as part of a deal worth SG$3.38 billion.
NOL reported net losses of US$105.1 million for the first quarter ended 31 March 2016, higher than the US$10.8 million a year earlier.
CMA CGM will pay S$1.30 a share in cash for the 2.6 billion shares in NOL, 6 per cent above the last closing price on the Singapore Exchange.
The combined capacity following the acquisition will be almost 2.4 million TEUs with a fleet of 563 vessels.
CMA CGM does not intend to preserve the listing status of NOL if it succeeds in acquiring more than 90 per cent of the company.
The deal is subject to anti-trust clearances in the US, European Union, and China.
Fewer than 1,000 of the 7,400 employees of NOL globally are based in Singapore.
NOL has 180 offices in more than 80 countries and operates 94 vessels representing 618,000 twenty-foot equivalent units (TEUs) in fleet capacity.
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Financial Transactions
Neptune Orient Lines has had several significant financial transactions in recent years. CMA CGM acquired NOL in 2016 for SG$3.38 billion, with Temasek tendering its shares to CMA CGM at SG$1.30 per piece.
CMA CGM's acquisition of NOL was a strategic move to create a $22 billion entity with more than 560 vessels. The combined company has a global market share of about 11.5 percent.
In 2003, NOL sold its wholly owned subsidiary, American Eagle Tankers, to Malaysia International Shipping Corporation Berhad for approximately US$1 billion. The transaction was the largest-ever M&A deal between companies in Singapore and Malaysia at the time.
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Temasek Sells NOL Stake for $2.3b
Temasek sold its entire stake in NOL for $2.3 billion to CMA CGM.
The sale price of $1.30 per share was 6% above the last closing price on the Singapore Exchange.
Temasek gave an irrevocable undertaking to CMA CGM to tender all of its shares, worth about $2.3 billion.
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CMA CGM plans to use Singapore as a key hub in Asia, leveraging on NOL's legacy tracing back to 1968.
CMA CGM will pay a 33% premium to the three-month volume-weighted average price to July 16.
The deal cements CMA CGM's position in the global container shipping industry with a combined turnover of $22 billion and a global market share of about 11.5%.
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Sell American Eagle Tankers for $1B
Singapore shipping company Neptune Orient Lines (NOL) is selling its wholly owned subsidiary, American Eagle Tankers (AET), for approximately $1 billion.
The deal is the largest-ever M&A transaction between companies in Singapore and Malaysia and the largest acquisition in the transportation industry in 2003.
Law firm Akin Gump Strauss Hauer & Feld LLP advised NOL in the transaction.
The transaction comprises the sale of all AET shares, together with the transfer of the ship-management operations for AET's vessels.
American Eagle Tankers is a key provider of petroleum transportation services in the Atlantic basin, including lightering, voyage-chartering and time-chartering services.
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The company has subsidiaries in the United States, the United Kingdom and Asia.
Akin Gump Strauss Hauer & Feld LLP is a leading international law firm with nearly 1,000 lawyers across multiple offices.
The firm has a diversified practice and represents regional, national and international clients in a wide range of areas.
Frequently Asked Questions
Why did NOL fail?
NOL failed due to high costs, an unsuitable business model, and small ships that couldn't compete in the downturn. These key factors led to the company's struggles.
What is the history of Neptune Orient Lines?
Neptune Orient Lines was founded in 1968 as Singapore's national shipping line, initially operating with a small fleet of five vessels. By the 1970s, the company had grown significantly, expanding its fleet to 21 vessels amidst the shift to containerized cargo.
What do Neptune lines carry?
Neptune Lines specializes in transporting finished vehicles, including cars and trucks, for major automotive manufacturers and logistics providers. Their fleet of 15 modern vessels ensures timely delivery with fast vessel speeds.
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