Neptune Orient Lines: Valuation and Capital Structure
(4 pages of text)
Case (Pub Mat)
Neptune Orient Lines Limited (NOL) was started as Singapore’s national shipping line to facilitate industrial development and support the economy. The CMA CGM Group (CMA CGM) had acquired 67 per cent of NOL from Temasek Holdings Private Limited for SG$2.3 billion or $1.30 per share—a 6 per cent premium over the last closing price. In 2016, CMA CGM sought to acquire the remaining shares at the same price so that it could delist NOL and take it private. In order to delist, the company would need to acquire another 23 per cent of shares to hit the acceptance threshold of 90 per cent. Should the remaining shareholders sell their shares at $1.30 per share, or hold out for a better price? Should bondholders of CMA CGA and NOL be concerned about the acquisition?
This comprehensive valuation case can be used in an advanced undergraduate or MBA course on corporate finance or financial management. The case presents an opportunity for students to
- conduct a valuation exercise of a large shipping company in the context of an acquisition, and
- examine the impact of the acquisition on the bonds of both the acquirer and the target.
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