French acquisition could deter new container exits

CMA CGM's purchase of Singapore's Neptune Orient Lines (NOL) comes with a significant discount on the carrier's vessels and containers, which according to Alphaliner could discourage others from exiting the struggling container sector.

The purchase by French CMA CGM of Singapore's Orient Neptune Lines (NOL), the parent company of container carrier APL, will have great significance for the industry as a whole. Not just because the transaction opens up for consolidation in the suffering container sector, but because the price which CMA CGM is paying to Singapore's national investment company Temasek for the shares in NOL could deter others planning to exit the industry, notes Alphaliner in an analysis.

"Although the pre-conditional offer price is higher than NOL's last traded price of S$1.225 per share, the failure of NOL's shareholders to obtain a premium over its book value will still have significant implications for the industry, especially for other potential sellers seeking to make an exit from the container shipping market," writes the analyst agency in its latest newsletter.

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