Temasek Holdings puts struggling Neptune Orient Lines up for sale

Singapore state-investment company Temasek Holdings Pte. Ltd. has put its struggling $1.7 billion container-shipping company up for sale, according to people familiar with the situation.

Neptune Orient Lines Ltd., a shipper 65% owned by Temasek and listed in Singapore, has been shopped to prospective buyers in recent months, these people said. A potential deal for the shipper, known as NOL, comes on the heels of a $1.2 billion deal by NOL to sell its profitable unit APL Logistics Ltd. to Japan’s Kintetsu World Express Inc., a company involved in air and ocean freight forwarding. The APL Logistics sale was completed in late May.

The deal would allow Temasek to exit the container shipping business, which has performed poorly in recent years amid excess capacity. Neptune Orient Lines’ market capitalization is around 2.3 billion Singapore dollars ($1.7 billion) and including debt, the company’s value is more than S$8 billion, according to data from S&P Capital IQ. The company had been in talks with a prospective buyer but the two sides couldn’t agree on price, according to a person familiar with the situation. NOL has been in deal talks with other shippers in recent years.

NOL declined to comment and Temasek said it won’t comment on “market speculation.”

The shipper, which was founded in 1968 as Singapore’s national shipping line, was part of the country’s effort to fashion itself as a crucial stop on global trade routes. The 35% of the company, one of the world’s largest shippers, that isn’t owned by Temasek trades on the Singapore Stock Exchange. The company’s shares have performed poorly, save for a bump earlier this year after the start of the APL sale process. Shares have tumbled since the deal was done.

NOL incurred losses in each of the past three years due to falling freight rates and an industry-wide glut of ships. It suffered a net loss of $260 million in 2014, worsening from a $76 million loss a year earlier, with weakness in its container-shipping business offset by profits from the logistics operations that were sold to Kintetsu World Express.

Singaporean regulations would require any buyer who purchases a 30% or more stake to make a mandatory general offer for all the company’s shares. (WSJ)