Tuesday, February 17, 2015

Freight Forwarding and Supply Chain Management Group Sold Off

NOL Parts with APLL in Billion Dollar Deal
Shipping News Feature

SINGAPORE – JAPAN – Tokyo headquartered freight carrier, Kintetsu World Express (KWE) has reached an agreement with Singapore based container shipping line, Neptune Orient Lines Limited (NOL) to purchase all of the shares of the latter’s subsidiary APL Logistics, for US$1.2 billion, a figure to astound market analysts, some of which had valued the company at considerably less. The deal is subject to approval from shareholders and the relevant competition authorities. Rumours of NOL’s intent to sell its logistics arm have been circulating since August 2014 after it released poor half year results. Now as the Group reports a third consecutive year loss, NOL hopes to return to some sort of financial stability as a result of the sale.

NOL said that the divestment of APL Logistics, which specialises in freight forwarding, cargo consolidation, warehousing and other supply chain management services, follows a robust and highly competitive process, and that the net proceeds of the sale will be applied to strengthen its financial position, including to repay its borrowings. It further said that the divestment will allow APL Logistics to realise its full potential. Ng Yat Chung, Group President and CEO of NOL, continued:

“The proposed transaction with KWE is expected to provide APL Logistics with the opportunity to expand its business with the backing of a company with strong fundamentals and a commitment to grow in the logistics space. We believe that KWE has the ability and the ambition to continue APL Logistics’ growth strategy.”

APL Logistics and its subsidiaries, all of which together make up the APLL Group, contributed US$1,659 million in revenue and US$80 million in core EBITDA in 2014, representing 19% and 25% of the consolidated revenue and Core EBITDA, respectively, for the NOL Group last year. Satoshi Ishizaki, Group President and CEO of KWE, said:

“This is a strategic move that will allow us to focus on improving our liner shipping business, while at the same time enabling APL Logistics to grow. The transaction will also strengthen our balance sheet and unlock value for our shareholders.

“We are very pleased to successfully enter into this transaction. Since 2013, we have laid out a strategy to strengthen our international presence especially in the US and Asia. This transaction fits right into our strategy. We intend to retain the headquarters of APL Logistics in Singapore and to run it as a separate unit. We will also ensure that members of the group work together for the benefit of our stakeholders. We warmly welcome customers and employees of APL Logistics into our group. To them, I would like to give my assurance that when this transaction is completed, KWE will continue to invest in and expand APL Logistics’ services so as to serve our customers better, and to create exciting career growth opportunities for all employees of the KWE family.”