Singapore state investment company Temasek Holdings has put Neptune Orient Lines (NOL) up for sale, according to Wall Street Journal sources.
NOL is the owner of American President Line (APL), the 12th biggest container shipping line in the world with a capacity of 570,000 teu.
The US$1.7bn shipping company is 65% owned by Temasek and has been struggling with debts and losses. It is also the only major shipping company with no order book, adding weight to speculation that its long-term future is unclear.
The Wall Street Journal reported that the company had been in talks with one prospective buyer but that the two sides couldn’t agree a price. NOL has previously been in separate merger talks with both Hapag-Lloyd and Orient Overseas Container Line (OOCL) and there is industry speculation that one of these two may be the buyer now.
All three lines are members of the G6 alliance, which also includes, NYK, Hyundai Merchant Marine and Mitsui OSK (MOL).
In 2008, there were rumours that NOL’s owner Temasek was about to take over Hapag-Lloyd instead of the other way around.
Jan Tiedemann, a liner shipping analyst at Alphaliner has suggested that Hapag-Lloyd’s owners may be too divided for such a major takeover. “I don’t see them in a position to takeover somebody now. They have just taken over CSAV and have a diverse ownership. The owners are not marching in the right direction”
The ownership consists of: German travel group Tui, who Tiedemann says want to exit the container shipping industry to focus on tourism; the City of Hamburg, whose focus is keeping jobs in Hamburg; a very rich Chilean family who lost a lot of money from their ownership of CSAV and the logistics company Kuehne + Nagel.
As for OOCL, not much is known about its strategy but it is of a similar size to NOL, which may be a problem. “It would be like a fish eating a similar-sized fish. I don’t know if they can do it,” Tiedemann said. OOCL is more focused on the transpacific trade while APL focuses more on intra-Asia trade.
There has also been speculation that Japanese shipping lines like NYK and MOL may be interested in buying APL, as growth prospects are limited in Japan. In May 2015, NOL sold APL Logistics for US$1.2 bn to Japan’s Kinetsu World Express. It is thought the logistics and shipping arms of NOL could be sold separately to raise a larger price.
An industry rumour has also linked CMA CGM with buying NOL. The French company has a history of mergers and acquisitions, as has its biggest competitor Maersk Line.
Maersk Line senior press officer Michael Storgaard tweeted the news with the caption: “‘It’s far better to buy a wonderful company at a fair price than a fair company at a wonderful price’ – Warren Buffett”.
The sale has not been confirmed but Tiedemann told CM that if APL is sold it will be because the Singapore government and Temasek are now less concerned with using the line as a geopolitical, strategic tool.