Singapore’s NOL suspends shares as M&A talks with France’s CMA CGM enters

Key shipping indicator, the Baltic Dry Index (BDI), a measure of freight rates for shipping bulk cargoes such as iron ore, coal and grains tanked to a new record low last week, is hovering near record lows.

CMA CGM said the acquisition of NOL will enable it to “cement its position among the global leaders in the container shipping industry” with a capacity of 2.4 million TEUs, a market share of about 11.5 per cent, a fleet of 563 vessels and a combined turnover of approximately US$22 billion.

In its brief filing with the Singapore Exchange on Monday, NOL asked for a halt in the trading of its shares “pending an announcement” without giving details.

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CMA CGM, privately owned by the Marseilles-based Saade family, accounts for around 8.8 per cent of the market.

In May, the Singapore-based company sold its APL Logistics arm to Kintetsu World Express Inc. for $1.2 billion to raise cash.

Last month, the company reported a net loss of 96 million for the third quarter, widening from a loss of 23 million in the same period the year before. The Singapore-based company operated 89 vessels as of Sept 18, according to its website. It has five container terminals in the U.S., Japan and Taiwan and has stakes in terminals in Vietnam, China and Thailand.

“The combined entity would reinforce Singapore’s leadership in the maritime and shipping sector as the city-state seeks to increase maritime services and transportation volumes, including committing more volumes through Singapore”, said the release. Its main hubs are Malta, the Moroccan city of Tangier, Khor Fakkan in the United Arab Emirates, the Jamaican capital of Kingston and Malaysia’s Port Klang.

A capacity glut, falling demand and lower rates are prompting shipping firms to explore mergers and acquisitions, Bloomberg said.

NOL, which has a market capitalization of $2.3 billion, has struggled from a prolonged downturn in the global shipping market, posting four years of consecutive losses. The levy for a 40-foot box to the US West Coast dropped 4.8% to $891.