CMA CGM Said to Seek Financing for Neptune Orient Takeover

(Bloomberg) -- CMA CGM SA, the world’s No. 3 container shipping company, is in talks with lenders to finance its potential takeover bid for Singapore’s Neptune Orient Lines Ltd., people with knowledge of the matter said.

The French shipping company is in discussions with banks including BNP Paribas SA, HSBC Holdings Plc and JPMorgan Chase & Co. for loans to back an offer for Neptune Orient, the people said, asking not to be identified as the information is private. Under the city-state’s takeover code, CMA CGM should demonstrate it has sufficient financial resources before making a definitive bid for Neptune Orient, which has a market value of S$3.1 billion ($2.2 billion).

Buying Neptune Orient would help Marseilles-based CMA CGM consolidate its position in the global container market as it competes with A.P. Moeller-Maersk A/S and Mediterranean Shipping Co. CMA CGM is seeking a combination with its Singaporean rival as shipping companies struggle to revive earnings amid a glut of vessels, shrinking demand and declining rates.

“It may not be a done deal yet, but CMA needs to demonstrate they have the financing capability to go ahead,” Soo Hai Lim, a Hong Kong-based money manager at Baring Asset Management (Asia) Ltd., said by phone Tuesday. “They should be able to get some synergies from this acquisition. Consolidation should be good for the industry.”

CMA CGM’s 7.75 percent bonds due January 2021 fell as much as 0.9 percent in Asian trading Tuesday, the most in a week. Shares of Neptune Orient rose 2.1 percent to S$1.21 at the close in Singapore on Tuesday.

Exclusive Talks

Neptune Orient and its controlling shareholder, Temasek Holdings Pte, said last month they are in exclusive talks with CMA CGM. The French company has until Dec. 7 to complete due diligence and negotiate a definitive offer. Temasek, Singapore’s state-owned investment firm, owns about 67 percent of Neptune Orient, data compiled by Bloomberg show.

CMA CGM, which employs more than 22,000 people worldwide, has about 470 vessels plying 170 shipping lanes, according to its website. 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.

The company, set up in 1978, is controlled by the family of founder Jacques Saade. A representative for CMA CGM said the company is “unable to disclose specifics when discussions are ongoing.”

Spokesmen for BNP Paribas, HSBC, Neptune Orient and Temasek declined to comment, while a representative for JPMorgan said the bank couldn’t immediately comment.

--With assistance from Kyunghee Park and Jonathan Burgos.

To contact the reporter on this story: Joyce Koh in Singapore at jkoh38@bloomberg.net To contact the editors responsible for this story: Ben Scent at bscent@bloomberg.net Lena Lee