Drewry: NOL Acquisition Would Put Maersk, CMA CGM Balance Sheets at Risk

Drewry says an NOL acquisition by A.P. Moeller-Maersk or CMA CGM would not be a financially advantageous move for either company.

Drewry Shipping Consultants Limited (Drewry) says that an acquisition of Singapore-based Neptune Orient Lines (NOL) by A.P. Moeller-Maersk A/S (Maersk) or CMA CGM S.A. (CMA CGM) would likely not be a financially advantageous move for either company.

"In a rational world, neither A.P. Moller–Maersk or CMA CGM should put their balance sheet at risk in buying NOL at a time when container shipping is expected to stay challenging for the next three years," stated Drewry.

Drewry says that it remains firm on its financial assessment of NOL, explaining that "the company lost another $66 million in Core EBIT in the third quarter and is on course for five-year operational losses from its liner division of over $1.1 billion."

However, Drewry admits it had misjudged the willingness of shipping industry suitors to pass on the opportunity to acquire their competition at a potentially reduced price.

"Any deal will be motivated by opportunity rather than logic," reasons Drewry, who believes that, of the two, "CMA CGM is the better fit, but Maersk has the deeper-pockets."

However Drewry says that the two container giants are aware of the "big risks attached to any takeover" and are unlikely to enter into a bidding war.

As a result, NOL's owners, Temasek Holdings Private Limited (Temasek), may have to settle on a lower price that it might otherwise expect if it wants to push through a sale.

In July, Drewry said that a lack of suitable buyers, unattractive assets, and no apparent urgency to push through a cut price deal meant that NOL was unlikely to be sold.