SINGAPORE's Neptune Orient Lines (NOL) has sold APL Logistics to Kintetsu World Express for US$1.2 billion, for a net gain $900 million to go towards fixing its ailing container shipping arm APL after four straight years of losses.
NOL chief executive Ng Yat Chung said the sale, to be completed in June to the Tokyo-based forwarder, would allow the group to focus on container shipping.
"To stay in liner shipping, you need to have a strong financial position because it is a capital intensive industry, and the sale will significantly improve the balance sheet," he said.
NOL said the sale followed a robust and highly competitive process, and that proceeds would also go to repay loans.
The transaction with Kintetsu World Express, a Tokyo based forwarder, is expected to provide APL Logistics with the opportunity to expand its business with the backing of a company with strong fundamentals.
"We believe that KWE has the ability and the ambition to continue APL Logistics?growth strategy," said Mr Ng.
APL Logistics is a global supply chain specialist in the auto, consumer, industrials and retail 60 countries offering services in freight management, customs brokerage, warehousing, distribution and supply chain consulting.
Back in October, Korea's CJ Korea Express Corp was touted at a possible buyer. That news came in a regulatory filing that it was weighing opportunities related to APL Logistics including merger or partnership.
London's Loadstar in December said NOL was in a quandary as it looked to sell APL Logistics, which could be valued at $1 billion - more than half of the parent company's market value.
If APL Logistics is sold at a high price, the resulting market value of the remainder of its parents assets, which would still comprise its liner unit APL, may come under more pressure, said Loadstar.
But if it did not sell its logistics unit, the group may struggle to deploy fresh capital in the container shipping division - which, in turn, would yield a loss of competitiveness at APL Logistics.
APL Logistics president Beat Simon said Kintetsu was acquiring a company that had grown nearly five times since being incorporated in 2000 and made $1.7 billion in revenue in 2014. Its primary focus was on automotive, consumer, retail and industrial verticals.
Source : HKSG.