Asia/Pacific News
Singapore, O3 Alliance Figure Prominently in CMA CGM's NOL Acquisition Plans
CMA CGM has followed a $2.4 billion offer to purchase NOL with the announcement of plans to bring APL, the company's liner division, into the Ocean Three Alliance (O3 Alliance), JOC reports.
The French carrier operates in the O3 Alliance on east-west trades along with China Shipping and United Arab Shipping Co.
Promising that the APL brand would be retained and given access to all CMA CGM trades, Rodolphe Saadé, vice chairman of CMA CGM, said "once authorization from anti-trust authorities has been received, we would like NOL to join us in Ocean Three."
In order to do so, APL will have to end its current affiliation with the G6 Alliance.
Michel Sirat, CMA CGM's chief financial officer, also disclosed that Singapore will factor prominently in the NOL acquisition: "We are looking at establishing a regional office in Singapore and, if it makes sense, to strengthen some of our activities, such as intra-Asia.
"With the size of the combined entity, it will make great sense to have double hubbing in Asia, because the added volumes will allow us to increase our business in Singapore while maintaining a strong presence in Port Klang (Malaysia)."
Under the acquisition deal, CMA CGM is reportedly assuming NOL's debt of $2.9 billion, and the carrier is planning to reduce its own $5 billion debt through $1 billion in asset sales – the particulars of which Sirat said could involve containers, vessels, or terminals.
Both Saade and Ng Yat Chung, group president and CEO of NOL, stress that the acquisition is driven by a need for scale, and if the deal goes through, say the combined entity will have a market share of 11.5 percent, a fleet of 563 vessels with a capacity of capacity of 2,399 thousand TEUs, and a turnover of approximately $22 billion.
As bullish as both parties may appear, Drewry Shipping Consultants Limited has gone on record as stating that the acquisition would likely not be a financially advantageous move.
