Long-term economic gains spur Temasek to accept CMA CGM’s discounted offer

CMA CGM is looking to strengthen its Singapore presence.

The potential of greater economic benefit to Singapore may be fueling Temasek’s acceptance of CMA CGM’s offer to acquire Neptune Orient Lines (NOL), according to a report by OCBC.

While the offer of $1.30/share in cash standing stands at a discount of 0.96x book value, Temasek is likely to snap it up because of CMA CGM’s purported commitment to strengthening its presence in Singapore.

According to the report, CMA CGM intends to “contribute to reinforce Singapore as a center of excellence in the field of maritime activities as CMA CGM plans to use Singapore as a key hub in Asia and to establish its regional head office here.”

Further, the report asserts that the offer price is fair given the muted outlook of global container industry.