Neptune to be major global carrier<\/p>\n
SINGAPORE (Reuter): Neptune Orient Lines Ltd (NOL)'s US$825
\nmillion takeover of U.S. container carrier APL Ltd will make NOL
\na major global carrier with more clout on the trans-Pacific
\nroute, NOL officials said yesterday.<\/p>\n
\"We will be enhancing our shipping coverage and raising our
\nposition as a global carrier since a lot of our customers are
\nglobal,\" Lua Cheng Eng, NOL's chief executive officer, said at a
\nmedia briefing on the merger.<\/p>\n
NOL officials said it was the biggest takeover yet by a
\nSingapore company.<\/p>\n
But NOL chairman Herman Hochstadt warned the purchase will
\nhurt the company's profits for 1997. He declined, however, to
\ngive details on the costs to NOL of the merger.<\/p>\n
Hochstadt said NOL's market share of trans-Pacific trade would
\nbe slightly more than 10 percent after the merger, from its very
\nlow base currently.<\/p>\n
APL is one of two U.S. container carriers. The other is Sea-
\nLand.<\/p>\n
\"We feel the two companies through the merger have lots of
\nsynergies. Once put in place, the services offered by both will
\ncomplement in many ways. We'll have a better end product,\" said
\nHochstadt.<\/p>\n
NOL's turnover is expected to be boosted to Singapore $6
\nbillion (US$4,2 billion) when the merger is completed by the
\nthird quarter of this year, from S$1.93 billion in 1996.<\/p>\n
Under the deal with APL, signed over the weekend, NOL would
\nbuy all 24.6 million outstanding APL shares at US$33.50 each,
\nmaking APL a wholly-owned subsidiary.<\/p>\n
NOL has been looking for a \"dance partner\" in the shipping
\nindustry since last year, said Lua.<\/p>\n
He said APL was finally chosen due to a strong complementary
\nfit to NOL's presence in Southeast Asia, Australia and along the
\nFar East-Europe route.<\/p>\n
\"APL is very strong across the trans-Pacific trade. It is a
\nmarket leader there. They have many terminals and we can leverage
\non that. It will help bring our costs down,\" said Lim How Teck,
\nNOL's deputy chief executive officer.<\/p>\n
Both companies, which will have a combined fleet of 113
\nvessels, are expected to enjoy cost savings of at least US$130
\nmillion per year following the rationalization of their
\noperations.<\/p>\n
The restructuring of the companies will take about 18 to 24
\nmonths, said Lua. He declined to give details of likely changes,
\nexcept to say both companies will continue to operate under their
\nexisting names.<\/p>\n
The proposed union between the companies is subject to
\napproval by APL's shareholders at a meeting to be held in two
\nmonths.<\/p>\n
Approvals also are needed from various regulatory bodies.<\/p>\n
NOL said the Stock Exchange of Singapore has granted it a
\nwaiver from obtaining shareholders' approval for the merger as
\nthe deal is considered part of NOL's core business strategy.<\/p>\n
Hochstadt said the takeover would have a negative impact on
\nNOL's earnings for 1997.<\/p>",
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