France's CMA CGM has revealed it is in discussions with Singapore's Neptune Orient Lines (NOL) over the potential sale of the company to the French shipping line.
CMA CGM is the third largest container company in the world and has 8.8 per cent of market share according to container analyst Alphaliner. The company has made an initial offer for NOL, which has a market value of US$1.7 billion.
NOL was started as Singapore's national shipping line, and following a US$285 million merger in 1997 with American President Lines (APL), it has developed into a company with more than 6,000 staff across 80 countries.
Singapore's state investment company, Temasek Holdings, which owns 67 per cent of NOL, put the shipping company up for sale in mid-2015 due to high debt levels and low profits.
NOL is the largest asian container line and has run approximately US$1.2 billion of losses over a four year financial period. Following news of the acquisition talks, shares at NOL have surged to a seven month high.
The talks come at a time where global shipping companies are devising strategies to remain competitive as freight rates are being distorted by an oversupply of new vessels and lower demand.
CMA CGM seeks to grow and expand their economies of scale, as two state-owned Chinese competitors, COSCO and CSG are in advanced merger talks.
CMA CGM and NOL have until December 7 to negotiate a deal.