CMA CGM to acquireGroup NOL, reinforcing its position in the Corporatecontainer shipping Presentation industry FinancialMedia departmentPresentation – December 7, 2015 19/03/2014 AGENDA
. Transaction Overview . Rationale for the Transaction . Support for the Transaction . Overview of the Combined Entity
Media presentation | 7 December 2015 │ 2 TRANSACTION OVERVIEW
. Pre-conditional Voluntary General Offer (“VGO”) by CMA CGM Group (“CMA CGM”) to acquire all shares in Neptune Orient Lines (“NOL”) at a cash offer price of S$1.30 per share . NOL’s majority shareholders (Temasek and its affiliates) hold 66.8% of NOL shares and have given an irrevocable undertaking to CMA CGM to tender all of their shares in acceptance of the offer . BNP Paribas, HSBC and JP Morgan are acting as financial advisers to CMA CGM and have provided committed acquisition financing for the transaction together with 3 other international banks
. Offer Price: S$1.30 per share in cash Financial Evaluation of ― Premium over unaffected price1: 49% Offer ― Premium over one-month VWAP through unaffected date1: 51%
. Delivering scale to succeed in current climate and ensure sustainable growth Transaction . Rationale Deepening and broadening combined services through complementary strengths . On a standalone basis, NOL would require significant capital investments to maintain competitiveness
Pre-conditions . Subject to anti-trust clearances in the US, European Union and China
Condition . Acceptance condition of 50% + 1 share
De-listing . CMA CGM intends to de-list NOL
1: Unaffected date refers to 16 July 2015, being the last full trading day before NOL’s announcement on 19 July 2015 in relation to media reports regarding a potential sale of NOL
Media presentation | 7 December 2015 │ 3 SCALE IS THE MAIN FACTOR FOR MAIN LINE-HAUL CARRIERS IN MAINTAINING PROFITABILITY
Comparison of Scale and Profitability (TEU 000’s, %)
10.0%
8.0% Wan Hai Scale
6.0% MSC
CMA-CGM Niche
4.0%
(2) OOIL
Margin Hanjin
2.0% COSCO EBIT
Evergreen NYK CSCL Yang Ming -- -- 400 800 1,200 1,600 2,000 2,400 3,0002,800 K Line
ZIMPIL
(2.0%) NOL Hapag-Lloyd
MOL HMM (4.0%) TEU Capacity(1) (000’s)
Source: Alphaliner, company filings. Notes: (1) Based on 2014 year-end TEU capacity of operating fleet (including chartered vessels); (2) Based on 2014 calendarized EBIT excluding non-recurring items. EBIT margin of the respective container liner segments used for Maersk, OOIL, COSCO, Hanjin, NOL, MOL, NYK, K-Line and SITC.
Media presentation | 7 December 2015 │ 4 SIGNIFICANT CAPITAL INVESTMENTS REQUIRED BY NOL TO ACHIEVE NECESSARY SCALE AND IMPROVE COMPETITIVE POSITIONING Announced Orders for ≥14,000 TEU Vessels Since 2013 (US$)
20 vessels with total capacity of 384,000 TEU
20 vessels with total capacity of 341,930 TEU
17 vessels with total capacity of 267,500 TEU
16 vessels with total capacity of 281,500 TEU
10 vessels with total capacity of 140,000 TEU 100+ Vessels >14,000 10 vessels with total capacity of 140,000 TEU TEU on Order with Estimated Value 10 vessels with total capacity of 140,000 TEU of US$15–20bn
6 vessels with total capacity of 120,000 TEU OOCL
9 vessels with total capacity of 156,000 TEU
5 vessels with total capacity of 92,000 TEU CSCL
4 vessels with total capacity of 80,000 TEU
Source: Company filings, Clarksons, news articles. Includes investments in vessels with capacities of 14,000 TEU or larger, from 2013 to 2015 YTD.
Media presentation | 7 December 2015 │ 5 RIGOROUS ASSESSMENT OF MULTIPLE STRATEGIC OPPORTUNITIES
• In the normal course of business, NOL has been continually evaluating all strategic options • Over the last few years, NOL has received numerous approaches from multiple interested parties • Several strategic opportunities were considered with various parties • CMA CGM was selected as the preferred counterparty on the basis of value and transaction certainty • CMA CGM is well placed to lead and support the enlarged entity into its next phase of growth
Media presentation | 7 December 2015 │ 6 OFFER TAKES INTO ACCOUNT INTRINSIC VALUE AND PROVIDES SHAREHOLDERS IMMEDIATE LIQUIDITY
Premium relative to historical trading levels(1)
(S$ / Share) (S$ / Share) Implied premium 1.50 Offer price S$1.30
1.40 (1) Offer price: S$1.30 Pre-rumor price S$0.88 exceeds historical closing prices since Jan 2013 Unaffected(Jul 16, 2015)price 49% 1.30 (July 16, 2015) (2 ) Pre-announcement S$1.05 1.20 price (Nov 6, 2015) 24% Nov 6: 1.10 S$1.05 1-month average S$0.86 51% 1.00
3-month average S$0.98 33% 0.90
0.80 Jul 16: 6-month average S$0.99 31% S$0.88 0.70 12-month average S$0.96 35% 0.60
(3) Analysts's median 0.50 S$1.00 30% Jan-13 Aug-13 Mar-14 Sep-14 Apr-15 Nov-15 target price
Source: FactSet market data as of Dec 4, 2015 Historical stock prices based on daily market close (1) Represents volume weighted average price (“VWAP”). VWAP statistics are for the period on and prior to Jul 16, 2015 which was the last full trading day before NOL’s announcement on 19 July 2015 in relation to media reports regarding a potential sale of NOL (2) Statistics as on Nov 6, 2015 which was the last full market day preceding the announcement of preliminary discussions with CMA and Maersk (3) Median of 14 analysts’ price targets of S$1.00 with a range of S$0.80 – S$1.30 as at 30 November 2015
Media presentation | 7 December 2015 │ 7 │ 7 ILLUSTRATIVE TIMELINE – TARGETED SATISFACTION OF PRECONDITIONS BY MID-2016
Announcement of Pre-Conditional Voluntary General Offer: 7 December 2015
Pre-conditions fulfilled; CMA CGM announces firm VGO: ~ June 2016 (example 30 June 2016)
Dispatch of Offer Document ; Offer opens for acceptance: + 14 days (example 14 July 2016)
Temasek tenders its shares in acceptance and offer becomes unconditional: + 6 days (example 20 July 2016)
First Closing Date: + 28 days after the offer opens (example 11 August 2016)
Media presentation | 7 December 2015 │ 8 NOL BOARD RECOMMENDS THE OFFER AND TEMASEK IRREVOCCABLY UNDERTAKES TO TENDER ALL OF ITS SHARES
• NOL board after considering strategic options, recommends CMA CGM’s offer • Citi has issued a fairness opinion to NOL board indicating that the offer is fair, from a financial point of view • NOL’s majority shareholders (Temasek and its affiliates) fully support the transaction and have given an irrevocable undertaking to CMA CGM to tender all of their shares in acceptance of the offer • CMA CGM does not intend to preserve NOL’s listing on SGX. Immediately after the offer closes: ― if CMA CGM holds 90% or more of total NOL shares outstanding, CMA CGM will commence the compulsory acquisition and delisting process ― If CMA CGM holds less than 90% of total NOL shares outstanding, NOL may remain listed on the Singapore Stock Exchange. ― Remaining shareholders could potentially face concerns around lower trading liquidity
Media presentation | 7 December 2015 │ 9 SUPPORT FOR THE TRANSACTION
Protracted weakness in Transaction unanimously freight rates has paved way approved and recommended Commitment to Singapore for industry consolidation by NOL Board
Majority shareholder has Building scale paves the way given irrevocable Solid integration for improved undertaking to tender all its competitiveness track record shares
Media presentation | 7 December 2015 │ 10 Overview of the GroupCombined Entity Corporate Presentation Financial department 19/03/2014 CMA CGM, A LEADING GLOBAL SHIPPING GROUP
. Third largest container shipping company worldwide . Family-owned, created 37 years ago by Jacques Saadé . Present in 160 countries, through 655 agencies network, 22,000 people worldwide . 469 vessels calling more than 400 ports on all 5 continents
Media presentation | 7 December 2015 │ 12 SCALE IS CRITICAL IN AN INDUSTRY WHERE SIZE MATTERS
› Reinforcing scale is critical to sustainable growth and profitability
Key container shipping . Scale allows global reach and ability to industry challenges benefit from growing geographies wherever they materialise . Market fragmentation . Scale provides ability to deploy fleet most . Volatile freight rate efficiently on routes, hence benefitting from environment lower unit costs
. Scale underpins higher profitability and cash flows in order to support adequate capex in a capital intensive industry
Media presentation | 7 December 2015 │ 13 CREATING SCALE TO ENHANCE COMPETITIVENESS
Media presentation | 7 December 2015 │ 14 STRONG COMPLEMENTARY STRENGTHS
› Increasing trade diversification driving more balanced volumes while taking advantage of dynamic growth regions
› CMA CGM has a leading position on the Asia- Europe, Asia- Mediterranean, Africa and Latin America routes, whilst APL is strong along the Transpacific, Intra-Asia and CMA CGM + NOL Indian subcontinent Market shares and ranking shipping routes
Source: Alphaliner and Drewry
Media presentation | 7 December 2015 │ 15 CMA CGM’S COMMITMENT TO SINGAPORE
. CMA CGM attaches significant importance to Singapore and the region for the deployment of its strategy in Asia . CMA CGM intends to leverage NOL’s historic legacy and reinforce its presence in Singapore . CMA CGM plans to establish its regional head office in Singapore . CMA intends to commit more volumes through Singapore
Media presentation | 7 December 2015 │ 16 SIGNIFICANT OPERATIONAL SYNERGIES
. Operational Synergies expected by 2019 ₋ Shipping lines: optimization of vessels and occupancy rates on routes ₋ Logistics : additional unit savings through economies of scale in port handling, container fleet, intermodal services ₋ Network rationalization
. Additional revenues synergies ₋ Combined group’s customers would have access to an extended range of products and services across all the strategic trades of global commerce
. CMA CGM’s strong integration track record ₋ Value creation through acquisitions (CGM, ANL, CNC, US lines…)
Media presentation | 7 December 2015 │ 17 KEY TAKEAWAYS
. Strategic acquisition leading to significant scaling up in an industry where size matters › Ability to accommodate sector growth with larger vessels › Scale underpins lower unit costs, higher profitability and cash flows in order to support adequate capex in a capital intensive industry › Scale will become even more differentiating in a consolidating market
. Complementary strengths of both companies enhancing diversity of CMA CGM’s trade portfolio and consolidating its leading position on different trades › Increasing CMA CGM trade diversification and achieving more balanced volumes while taking advantage of dynamic growth regions › CMA CGM has a leading position on the Asia-Europe, Asia-Mediterranean, Africa and Latin America routes, whilst APL is strong along the Transpacific, Intra-Asia and Indian subcontinent shipping routes
Media presentation | 7 December 2015 │ 18 SAFE HARBOUR
This Presentation should be read in conjunction with the pre-conditional offer announcement issued by CMA CGM and the announcement issued by NOL in response thereto, each dated 7 December 2015. As stated in NOL’s response announcement, the directors of NOL will appoint an independent financial adviser to advise them in connection with the offer and the directors of NOL will make their final recommendation on the offer if and when it is made, and such advice and recommendation will be disclosed in the formal document containing the offer. Shareholders of NOL are advised to read all the documents relating to the pre-conditional offer that are filed with the Singapore Exchange ("SGX-ST") when they become available because they contain important information. Copies of the documents may be obtained, when available, from the website of the SGX-ST (www.sgx.com).
The directors of NOL (including any who may have delegated detailed supervision of this Presentation) have taken all reasonable care to ensure that the facts stated and all opinions expressed in this Presentation relating to NOL are fair and accurate and to ensure that the facts stated and all opinions expressed in this Presentation relating to NOL are fair and accurate and that no material facts relating to NOL have been omitted from this Presentation which might cause this Presentation to be misleading in any material respect, and they jointly and severally accept responsibility accordingly. Where any information has been extracted or reproduced from published or otherwise publicly available sources, the sole responsibility of the directors of NOL has been to ensure, through reasonable enquiries, that such information has been accurately extracted from such sources or, as the case may be, reflected or reproduced in this Presentation. Except for the facts stated and opinions expressed in this Presentation relating to NOL, the directors of NOL accept no responsibility for any other fact stated or opinion expressed in this Presentation.
The directors of CMA CGM (including any who may have delegated detailed supervision of this presentation) have taken all reasonable care to ensure that facts stated and all opinions expressed in this presentation are fair and accurate and that no material facts have been omitted from this presentation, the omission of which would make any statement in this presentation misleading and they jointly and severally accept responsibility accordingly. Where any information has been extracted or reproduced from published or publicly available sources or obtained from NOL, the sole responsibility of the directors of CMA CGM has been to ensure through reasonable enquiries that such information is accurately extracted from such sources or, as the case may be, reflected or reproduced in this presentation.
All statements other than statements of historical facts included in this presentation are or may be forward-looking statements. Forward-looking statements include but are not limited to those using words such as “expect”, “anticipate”, “believe”, “intend”, “project”, “plan”, “strategy”, “forecast” and similar expressions or future or conditional verbs such as “will”, “would”, “should”, “could”, “may” and “might”. These statements reflect CMA CGM's current expectations, beliefs, hopes, intentions or strategies regarding the future and assumptions in light of currently available information. Such forward-looking statements are not guarantees of future performance or events and involve known and unknown risks and uncertainties. Accordingly, actual results may differ materially from those described in such forward-looking statements. Shareholders and investors should not place undue reliance on such forward-looking statements, and CMA CGM does not undertake any obligation to update publicly or revise any forward-looking statements, subject to compliance with all applicable laws and regulations and/or rules of the SGX-ST and/or any other regulatory or supervisory body or agency.
Media presentation | 7 December 2015 │ 19 SAFE HARBOUR
NOTICE TO HOLDERS IN THE US: The pre conditional Offer relates to the securities of a non-US company, which is subject to disclosure requirements of a foreign country that are different from those of the United States. Financial statements presented have been prepared in accordance with foreign accounting standards that may not be comparable to the financial statements of United States companies. It may be difficult for an investor to enforce any rights and any claim it may have arising under U.S. federal securities laws, since CMA CGM and NOL have their corporate headquarters outside of the United States, and some or all of their officers and directors may be residents of foreign countries. An investor may not be able to sue a foreign company or its officers or directors in a foreign court for violations of the U.S. securities laws. It may be difficult to compel a foreign company and its affiliates to subject themselves to a U.S. court’s judgment.
NOTICE TO HOLDERS IN THE UK: This presentation is only being distributed to and is only directed at (i) persons who are outside the United Kingdom or (ii) investment professionals falling within Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 (the Order) or (iii) high net worth companies, and other persons to whom it may lawfully be communicated, falling within Article 49(2) of the Order (all such persons together being referred to as relevant persons). Any investment activity to which this presentation relates will be only available to, and will be engaged in only with, relevant persons. Any person who is not a relevant person should not act or rely on this presentation or any of its contents.
OFFERING RESTRICTIONS: This presentation does not constitute an offer to purchase or the solicitation of an offer to sell any securities of CMA CGM and/or NOL. The pre-conditional Offer described herein is not made (and is not intended to be made), directly or indirectly into any other jurisdiction in which such Offer would be unlawful prior to the registration or qualification under the laws of such jurisdiction. Accordingly, persons who come into possession of this presentation should inform themselves of and observe these restrictions.
Media presentation | 7 December 2015 │ 20 APPENDIX
Media presentation | 7 December 2015 │ 21 CMA CGM + NOL: KEY METRICS
CMA CGM NOL Combined #3 #12 #3
Volume mTEUs 12. 8 5.1 17.9 72% 28% Revenue USD m 16 331 5 925 22 256 74% 26% Key financials EBITDA USD m 1 551 314 1 865 82% 18% LTM Q3 2015 EBITDA margin % of Rev 9.5% 5.3% 8.4% n/a Core EBIT USD m 1 225 -70 1,155 107% -7% Core EBIT margin % of Rev 7.5% -1.2% 5.2% n/a
Market share 8.8% 2.7% 11.5% n/a Operated fleet kTEUs 1 781 547 2 328 77% 23% Existing fleet 456 87 543 84% 16% Key metrics as Owned Vessels 88 51 139 63% 37% at October 2015 TEUs 295 491 0 295 491 100% Orderbook Ships 26 0 26 100% % exist. 16% 0 12% n/a
Operated fleet Owned 34% 27% 43% breakdown 57% (based on TEUs) Chartered 66% 73%
Source: Alphaliner as of November 2015, company information
Media presentation | 7 December 2015 │ 22