CMA CGM Secures Funding for NOL Takeover: Reports

CMA CGM is understood to have secured the necessary funding to buy NOL.

CMA CGM S.A. (CMA CGM) has secured the necessary financial backing to proceed with an acquisition of Singapore's Neptune Orient Lines (NOL), Reuters reports, citing two people said to be familiar with the matter.

Ship & Bunker reported in November that NOL, which has a current market value of $2.2 billion, had entered into exclusive takeover talks with CMA CGM until this Saturday, December 7, 2015, having previously also been in discussions with Maersk.

Lenders including HSBC, BNP Paribas, and JPMorgan are now said to have provided "firm commitments" to fund an initial stake in NOL thought to be around 67 percent.

Singapore acquisition rules mean that, if completed, that would trigger a mandatory offer for the remaining stake in NOL.

CMA CGM, NOL, Temasek, and the banks have not yet made an official statement on the matter.

Reports surfaced in July that NOL's majority shareholder Temasek Holdings Pte. Ltd. (Temasek) was looking to sell the business for $1.7 billion, which were initially downplayed by the box shipper.

In November Drewry Shipping Consultants Limited (Drewry) said that "in a rational world, neither A.P. Moller–Maersk or CMA CGM should put their balance sheet at risk in buying NOL," with a similar warning being issued to Maersk by Moody's Investors Service.

CMA CGM is currently ranked by Alphaliner as the world's third largest carrier with an 8.8 percent share of the market, and NOL's APL 13th at 2.7 percent.

While a successful deal would not change CMA CGM's ranking, it would close the gap with second placed carrier Mediterranean Shipping Company (MSC) who has a 13.3 percent market share.

However last month, Timothy Ross, head of regional transportation research at Credit Suisse Investment Banking, said any deal would allow CMA CGM to "dominate the trans-Pacific lanes" with a 12 percent market share, compared to Maersk Line's 9 percent.

Last month Maersk Line said that it would still be willing to revive its interest in an acquisition of NOL if CMA CGM's negotiations fail.