Neptune Orient Lines Limited Potential Acquisition of NOL by way of Pre-conditional Voluntary General Offer by CMA CGM 7 December 2015 Agenda
• Transaction Overview
• Rationale for the Transaction
• Financial Information
• Indicative Timeline
Page 2 | 7 December 2015 | Pre-Conditional Voluntary General Offer for NOL 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- . Subject to anti-trust clearances in the US, European Union and China conditions
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 Page 3 | 7 December 2015 | Pre-Conditional Voluntary General Offer for NOL Freight rates are on a continual downtrend
Shanghai Containerized Freight Index(1)
1,600
1,400
1,200
1,000
800
600 Nov 27: 535
400 Oct-09 Feb-10 Jul-10 Nov-10 Mar-11 Jul-11 Dec-11 Apr-12 Aug-12 Dec-12 May-13 Sep-13 Jan-14 Jun-14 Oct-14 Feb-15 Jun-15 Nov-15
Source: Clarksons, Bloomberg. Note: 1 .The base composite index is 1,000 points and the base date is October 16, 2009. Data updated weekly.
Page 4 | 7 December 2015 | Pre-Conditional Voluntary General Offer for NOL 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 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.
Page 5 | 7 December 2015 | Pre-Conditional Voluntary General Offer for NOL Significant capital investments required 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.
Page 6 | 7 December 2015 | Pre-Conditional Voluntary General Offer for NOL Combination to form a top tier liner company
US$7.0bn1 5.7m TEU 0.6m TEU US$16.7bn 12.2m TEU 1.8m TEU
2014 Revenue 2014 Volumes Fleet Capacity 2014 Revenue 2014 Volumes Fleet Capacity
Over weekly services ; shipping routes between 80 Over 7,400 170 Over 22,000 call ports in over 50 countries; 400 ports in 160 countries; 94 vessels Employees Globally 469 vessels Employees Globally
Combined company will cement position as the #3 largest liner company globally with strengthened competitive position
1. Excludes revenue from APL Logistics.
Page 7 | 7 December 2015 | Pre-Conditional Voluntary General Offer for NOL Strengthened competitive position with increased scale in a consolidating industry
Fleet capacity Market share Number of ships Orderbook (as a % Ongoing consolidation in the Position (‘000s TEU) (%) (#) of capacity) industry
14.9% 592 14% 1 Merger announcement
2 13.4 % 497 23% pending:
2,328 11.5% 543 12%
3 1,781 8.8% 456 16%
4 4.6% 195 42%
5 4.6% 172 6%
6 4.3% 163 46% Merger completed in Dec 7 3.5% 134 16% 2014:
8 3.2% 136 4%
9 3.1% 105 6%
10 2.8% 98 25%
11 2.8% 102 24%
12 547 2.7% 87 0%
1,000 2,000 3,000 Source: Alphaliner November 2015 data
Page 8 | 7 December 2015 | Pre-Conditional Voluntary General Offer for NOL Rigorous assessment of multiple strategic opportunities
• In the normal course of business, NOL has been continually evaluating all strategic options • Over the last few years, NOL has received numerous approaches from multiple interested parties • Several strategic opportunities were considered with various parties • CMA CGM was selected as the preferred counterparty on the basis of value and transaction certainty • CMA CGM is well placed to lead and support the enlarged entity into its next phase of growth
Page 9 | 7 December 2015 | Pre-Conditional Voluntary General Offer for NOL Offer takes into account intrinsic value and provides shareholders immediate liquidity
(S$) Premium Last unaffected traded share price1 S$0.875 49% VWAP for the one month period S$0.861 51% through unaffected date1 VWAP for the three month period S$0.978 33% through unaffected date1 Analysts2 median price target S$1.00 30%
• Offer price is at a premium of 49% to NOL’s unaffected share price • Offer price of S$1.30 per share implies a EV/ LTM EBITDA of 16.1x and P/B of 0.96x • Offer price is also a 30% premium over analyst median price target
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 2: 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
Page 10 | 7 December 2015 | Pre-Conditional Voluntary General Offer for NOL Illustrative Timeline – Targeted satisfaction of pre- conditions 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)
Page 11 | 7 December 2015 | Pre-Conditional Voluntary General Offer for NOL NOL board recommends the offer and Temasek irrevocably 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
Page 12 | 7 December 2015 | Pre-Conditional Voluntary General Offer for NOL Introduction to CMA CGM: The 3rd largest container shipping group globally Company overview Fleet overview
› 8.8% market share by capacity(1) Total fleet(1) › Extensive global network of 166 shipping agencies, 655 offices Capacity (‘000s TEU) 1,781 in more than 160 countries and approximately 20,000 employees Number of vessels 469
(5) › Growth supported by strategic alliances – notably Ocean Three Average fleet age 7.7 (3) (4) with CSCL and UASC representing 15% of global Split of fleet per capacity(1) 66% chartered / 34% owned capacity(1) Orderbook(1) › Family owned since founding in Marseille in 1978 by Jacques Capacity (‘000s TEU) 295 Saadé
› Over 80 weekly servicesTrade and mix call (capacity) ports in over 50 countries Key financials 16,739 TransAtlantic 3% Others 15,923 15,902 Revenue (US$m) 2% Intra-Asia 4% Far East - Europe Core EBIT margin Intra-Europe 5% 24% 12,101 Australasia 7%
7.2% Middle East – India 6.5% 11% 5.8% 4.8% TransPacific 17% LatAm 13% Africa 14%
Sources: Company information, Alphaliner 2012 2013 2014 9M’ 15 Notes: (3) CSCL = China Shipping Container Lines (1) Based on Alphaliner November data (4) UASC = United Arab Shipping Company (2) Latest available information as per company (5) Average age of operated vessels as of March 2015 (weighted average age of operated vessels)
Page 13 | 7 December 2015 | Pre-Conditional Voluntary General Offer for NOL Appendix
• Overview of CMA CGM
• CMA CGM + NOL
Page 14 | 7 December 2015 | Pre-Conditional Voluntary General Offer for NOL CMA CGM: A young and flexible fleet of container vessels
Young fleet (7.7 years weighted average age of operated Significant degree of flexibility in operations vessels(1))
Total fleet(2) Chartered Shipping Fleet (% of fleet, in TEU)(2) Capacity (‘000s TEU) 1,781 73% 66% Number of vessels 469 64% 61% 56% 55% 46% 46% (2) 42% 42% Owned fleet 37% Capacity (‘000s TEU) 604 30% 26% As a % of total capacity 34% Number of vessels 88
Orderbook(2)
APL
MOL
MSC
CSCL
Hanjin OOCL Lloyd
Capacity (‘000s TEU) 295 Süd
Hapag- Maersk
COSCO Hamburg
As a % of total capacity 16% Evergreen
Yang Ming Yang CMA CGM CMA Number of vessels 26 Chartered Shipping Fleet (% of fleet in TEU)(1) Access to the larger vessels(3) Flexible maturity portfolio (as a % of capacity)(3)
Chartered > 5 years > 7,000 TEU (5%) 41% of capacity Chartered 1 - 5 Owned years (18%) (31%) 2,500 – 6,999 TEU 44% of capacity
Chartered < 1 year < 2,500 TEU (46%) 15% of capacity
Sources: Company information, Alphaliner Notes: (1) Average age of operated vessels as of March 2015 (2) Based on Alphaliner November 2015 data (3) Fleet breakdown as of March 2015 Page 15 | 7 December 2015 | Pre-Conditional Voluntary General Offer for NOL CMA CGM: An experienced management team
Jacques Saadé, Founder, Chairman and CEO Rodolphe Saadé, Vice-Chairman, Executive officer and Director
› 78 years old › 45 years old › Founded CMA in 1978 › Became Executive Officer and a Board member in 2010, › Graduated from LSE in 1957 Vice-Chairman since 2014 › From 1996 to 2008, Jacques Saadé pursued the › Started as a trainee at CMA CGM in New-York in 1994 Group’s expansion via external growth. and worked as a line manager and director of the › In particular he acquired CGM . TransAtlantic and TransPacific routes › This acquisition, was the first step in a series of targeted › Previously served as CEO-Founder of Dynamics acquisitions that would contribute to positioning CMA Concept in Lebanon CGM Group as a world leader in the shipping industry › Obtained a Bachelor of Commerce degree from Concordia University in Montreal Farid Salem, Executive officer and Director
› 75 years old › Became Executive Officer and a Board member in 2010, started working for CMA CGM in 1986 › Previously headed the import and distribution of food products in Lebanon and industrial fishing operations in Michel Sirat, Group Chief Financial Officer Madagascar 54 years old › Holds a master in Law and Economics from St Joseph › University in Beirut › Served as CFO since 2011 Tanya Saadé, Executive Officer and Director › Between 2000 and 2011, was a senior executive in various financial and operational positions at Suez › Started working for CMA CGM in 1995 (ENGIE) Group in Paris, Houston and Brussels › In charge of the General Secretary as well as Internal › Previously worked at the French Treasury and the IMF and External Communication, Global Accounts and › Holds degrees from ENA, Ecole Centrale Paris and Marketing, Administration, Institutional Relations Institute of Political Studies of Paris › Appointed Executive Officer in 2014
Source: Company information
Page 16 | 7 December 2015 | Pre-Conditional Voluntary General Offer for NOL CMA CGM + NOL: More balanced trade route exposure and strengthened position on specific trades
Capacity ranking by line
Far East - Europe 3 3
TransPacific 4 1
Latin America 5 5
Middle East/India 3 2
Australasia 1 1
Africa 3 3
TransAtlantic 4 4
Intra-Asia 7 4
Intra-Europe 2 2
. Strong complementarity between (i) CMA CGM leading positions on Asia-Europe and North-South trades and (ii) NOL leading positions on Intra-Asia, TransPacific, Asia-Gulf and Japan
Source: Company information Page 17 | 7 December 2015 | Pre-Conditional Voluntary General Offer for NOL CMA CGM + NOL: Long operating track- records with strong brands
› Established in 1848 › Established in 1978 › More than 160 years of operating track-record (started from › Family business and entrepreneurial mind-set (started from History one American steamer voyage on the NY – California line) one shipping line and four employees) › Acquired by NOL in 1997 (Singapore shipping / logistics › Accelerated growth via key acquisition opportunities company owned by Temasek since 1975 and listed in 1981)
› Focus on cargo business and then container shipping › Trans-continental cargo shipping services with comprehensive › Development in Asia and ME both through internal and global connectivity Business external growth › Ranks amongst most reliable carrier globally evolution › Co-creation of OCEAN THREE › Well-supported by nine terminals (owned and joint ventures) › Has become the #3 in the industry with clear advance on #4 across the United States, Asia and Europe
Ownership › Family owned company (c. 70% stake) › Majority stake owned by Temasek (67%) support
› French State shareholding Unique › Operates US flagged vessels › Strong portfolio of brands specialised by routes characteristics › Strong exposure to Intra-Asia and Transpacific trade lanes › Strong exposure to Europe-Asia and Transatlantic trade lanes
› Headquartered at CMA CGM Tower in Marseille (France) › Headquartered in Singapore Hubs › 655 offices worldwide › Over 180 offices worldwide
Source: Company information
Page 18 | 7 December 2015 | Pre-Conditional Voluntary General Offer for NOL 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 EBITDA USD m 1 551 314 1 865 82% 18% financials 8.4% n/a LTM Q3 2015 EBITDA margin % of Rev 9.5% 5.3% 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% Key metrics Existing fleet 456 87 543 84% 16% as at Owned Vessels 88 51 139 63% 37% 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 66% 57% (based on Chartered 73% TEUs)
Source: Alphaliner as of November 2015, Company information
Page 19 | 7 December 2015 | Pre-Conditional Voluntary General Offer for NOL Disclaimer
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. Neptune Orient Lines Ltd 9 North Buona Vista Dr #14-01 Metropolis Tower 1 End of Presentation Singapore 138588 Tel: (65) 6278 9000 Fax: (65) 6278 4900 Thank You Company registration number : 196800632D Website: www.nol.com.sg