CMA CGM SA’s $3.38 billion takeover of Neptune Orient Lines offers two advantages for Singapore: It allows state investment firm Temasek Holdings to get rid of a money-losing business, while furthering the city-state’s ambitions as a shipping hub.
The French company, the world’s third-biggest shipping company by capacity, offered $1.30 a share, 6.1% more than Neptune Orient’s last closing price of $1.225 Friday. Temasek agreed to sell its roughly 67% stake, triggering a mandatory takeover offer by CMA CGM for the remaining shares.
The deal lets Temasek break free of a company that has made losses in five of the past six years, and pocket US$1.6 billion ($2.25 billion) from it, while CMA CGM expands its trade links within Asia and to the US. The Marseilles-based company will make Singapore its Southeast Asian headquarters and deploy more vessels there, bringing in more container volume than Neptune Orient could achieve on its own.
“Ultimately it’s all about entrenching Singapore’s role as a hub, be it for logistics, financial or legal services,” said Song Seng Wun, an economist at CIMB Private Banking in Singapore. “If we can’t be physically moving the goods we do the next best thing, which is managing and making money from the various spokes and hubs that connect the movement.”
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The French company, the world’s third-biggest shipping company by capacity, offered $1.30 a share, 6.1% more than Neptune Orient’s last closing price of $1.225 Friday. Temasek agreed to sell its roughly 67% stake, triggering a mandatory takeover offer by CMA CGM for the remaining shares.
The deal lets Temasek break free of a company that has made losses in five of the past six years, and pocket US$1.6 billion ($2.25 billion) from it, while CMA CGM expands its trade links within Asia and to the US. The Marseilles-based company will make Singapore its Southeast Asian headquarters and deploy more vessels there, bringing in more container volume than Neptune Orient could achieve on its own.
“Ultimately it’s all about entrenching Singapore’s role as a hub, be it for logistics, financial or legal services,” said Song Seng Wun, an economist at CIMB Private Banking in Singapore. “If we can’t be physically moving the goods we do the next best thing, which is managing and making money from the various spokes and hubs that connect the movement.”
Click Here To Register For Free Trial Services OR Give A Missed Call : +6531581402 Follow Us On Twitter : www.twitter.com/epicresearchsg Like Us On Facebook : www.facebook.com/EpicResearchSingapore Need Any Assistance Feel Free To Mail Us at : info@epicresearch.sg
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