Asia/Pacific News
Update: Temasek Looking to Sell Singapore's NOL For $1.7 Billion
- Update: Added that a statement was released by NOL on Monday.
Singapore based Neptune Orient Lines (NOL) is up for sale for $1.7 billion, according to a report by the Wall Street Journal citing people familiar with the matter.
Government run Temasek Holdings Pte. Ltd. (Temasek), who owns 65 percent of NOL, was said to have already been in negotiations with one potential buyer but a sale price could not be agreed.
NOL, who operates 92 vessels under the APL brand, earlier this year sold off its APL Logistics Ltd. (APL) business to Japanese company Kinetsu World Express Inc. (KWE) in a deal worth $1.2 billion.
Spinning off the logistics business ahead of time makes NOL a more attractive prospect, according to analysts.
"This has made the company into a pure play liner business, and any buyer will not be buying a portfolio," Lim Lian Hoon, managing director of global advisory firm AlixPartners, was quoted as saying.
"The sale also enormously improved the balance sheet, which makes some kind of deal more possible."
Reports have suggested Hapag-Lloyd and Orient Overseas Container Line (OOCL) as possible buyers, but NOL was said to have initially declined to comment on the matter adding that it would not comment on "market speculation."
However on Monday NOL issued a statement saying it has not made any decision with respect to a potential sale of the company, but noted it "has a duty to consider its options to maximize shareholder value as part of its conduct of normal business."
Temasek also owns Singapore's port operator, PSA International Pte. Ltd.
Andy Lane, partner at CTI Consultancy, says the sale comes as little surprise as NOL is one of the worst performing businesses in Temasek's portfolio.
"Singapore does not really need a line - or an airline for that matter. It has the port and airport infrastructure in place to secure is own supply chain needs," Lane told JOC.com.
"I would therefore not see any 'sovereign' issues preventing a sale of APL, which is more viable now that APL Logistics has been carved out."
Earlier this year NOL said low bunker prices helped cushion a net loss of $11 million for the first quarter of 2015, an improvement on the $98 million net loss for the same period last year.
