Asia/Pacific News
NOL Takeover Talks Fail to Lift Share Price, Highlights Market Scepticism Over a Sale
Despite confirming on Saturday it was in takeover talks with both CMA CGM S.A. (CMA CGM) and A.P. Moeller-Maersk A/S (Maersk), Singapore-based Neptune Orient Lines Ltd. (NOL) Thursday saw it's share price slip back to S1.035, lower than the $1.055 it was on Monday.
While last weekend's confirmation of talks along with reports that a preliminary offer had been made gave the share price a brief 6 percent boost in early trading, it failed to stick, and ultimately closed only a whisper higher than Friday's pre-announcement close price of S$1.045.
Despite some analyst observations that the price had "jumped" to its highest since May - which was of course true - Monday's close of $1.055 was an improvement on the $1.050 achieved on both the 15th and 23rd of October by only the smallest of margins.
And while, following Tuesday's holiday, NOL closed at S1.06 on Wednesday before yesterday's slide, it is a long way from the S$6+ the stock witnessed at times during 2007, with investors apparently feeling that even the 52-week high of S$1.1850 achieved on April 27 is currently too much for the company that has lost more than $1 billion in value over the last four years.
Perhaps most notably, Thursday's close is a discount of 25 percent of the company's book value of S$1.380.
Alphaliner this week said the situation reflected the market's scepticism that a sale can be successfully concluded, and noted that "significant obstacles" remained before that could happen.
"These are mainly related to the difficulty of reaching an agreement on the firm's valuation," said Alphaliner, adding that NOL has been been chronically unprofitable since 2009, has seen its global capacity share fall to only 2.8 percent, and lacks attractive assets that would attract a premium.
In August analysts had suggested that a price of about $2 billion would offer the buyer "a modern fleet at a comparative bargain price."
