CMA CGM offers $2.4 bln for Singapore NOL to expand trans-Pacific routes

By Saeed Azhar and Rujun Shen

SINGAPORE (Reuters) - France's CMA CGM, the world's third-largest container shipping firm, made a S$3.4 billion ($2.43 billion) offer on Monday to buy Singapore's Neptune Orient Lines to expand its presence on trans-Pacific routes.

Family-owned CMA CGM offered S$1.30 a share in cash, 6 percent above NOL's last closing price on the stock exchange. Temasek, which owns nearly 67 percent of NOL, has accepted the offer and will tender all of its shares.

The deal would require anti-trust approvals from the United States, Europe and China. After they are obtained, a formal offer is expected to be launched around June 2016, NOL CEO Ng Yat Chung told a briefing.

NOL has struggled amid a prolonged downturn in the global shipping market, posting four consecutive years of losses up to the year ended December 2014.

Overcapacity, slower economic growth and weak commodity prices could put smaller shipping firms at risk, and consolidation is highly likely among the larger ones, ratings agency Fitch said in a report last week.

"With few others having the resources or inclination, we suspect that this is not just the best offer for NOL stock but the only one," Credit Suisse analysts wrote in a report on Monday.

CMA CGM's offer closes the chapter on a difficult investment for Temasek. The state investor paid S$2.80 a share in 2004 when it increased its stake in NOL to 68 percent from 29 percent.

CMA CGM will make a mandatory cash offer for the remaining shares from minority shareholders that include BlackRock.

EVENTUAL SHARE LISTING

Rodolphe Saade, vice chairman of CMA CGM, told reporters in Singapore on Monday that discussions with NOL began a year ago. CMA CGM will eventually consider listing its shares, possibly in Singapore.

The NOL acquisition would be Singapore's biggest inbound deal since 2013 when companies linked to Thai tycoon Charoen Sirivadhanabhakdi took control of conglomerate Fraser and Neave for $11 billion.

NOL's APL unit is the world's 13th-biggest in terms of capacity, and combining it with CMA would create a fleet of 2.33 million twenty foot equivalent units (TEUs) with an 11.5 percent global capacity share, according to analysts at consultancy Alphaliner.

CMA CGM said the deal will reinforce its global position, with combined revenue of $22 billion and 563 vessels.

It would not change CMA CGM's global ranking but would enable the combined entity to dominate the trans-Pacific lanes with a 12 percent share, ahead of the 9 percent of global leader AP Moeller-Maersk's Maersk Line, Credit Suisse analyst Timothy Ross said last month.

But with $5 billion of its own debt, CMA CGM will be burdened by NOL's debt of $2.9 billion. The French company, which is taking a bank loan to finance the deal, said it plans to sell assets worth $1 billion from the combined entity over the next 18 to 24 months to cut debt.

CMA CGM was advised by BNP Paribas , HSBC , and JPMorgan . Citigroup advised NOL.

($1 = 1.4002 Singapore dollars)

(Editing by Ryan Woo and Muralikumar Anantharaman)