Dec.11--FRENCH shipping giant CMA CGM is paying below book value in its purchase of Singapore's Neptune Orient Lines, according to Paris consultancy Alphaliner.
At the US$2.41 billion stated purchase price, CMA CGM is paying 0.96 times book value of the company at the end of September.
Alphaliner said the failure of NOL's shareholders to obtain a premium over its book value will have significant implications for the industry, especially for other potential sellers seeking to make an exit from the container shipping market.
"The discount to NOL's book value reflects the impairment of the company's asset values, compared to historical acquisition costs," the analyst noted.
"The value of the carrier's containerships and container boxes will need to be discounted between 20 and 40 per cent due to the reduction in asset values in the last few years," Alphaliner said.
However, when announcing the deal this week, Rodolphe Saade, CMA CGM vice chairman, defended the price. "Even if some say the price is low, we believe it is a very real and significant price we are putting on the table," he said.
The jewel in the NOL crown is its box unit APL and its presence in the transpacific and Asia-Mideast trades, as well as its interests in nine container ports in the US, Europe and Asia
These assets are complementary to CMA CGM's network. However, Alphaliner said these were still insufficient to lift NOL's valuation, even with protracted discussions between both parties that lasted for a year.
(Source:shippingazette)