Taipei: French liner giant CMA CGM is in discussions with a Taiwanese container line, thought to be Wan Hai Lines, over a possible takeover bid, Seatrade Asia Online can exclusively reveal.
CMA CGM officials are in Taipei this week to thrash out the deal. Neither party would confirm the discussions. Insiders say the acquisition would be complimentary to CMA CGM's global network providing a dedicated intra-Asia network, considered to be one of the most extensive in the sector. The Wan Hai brand is likely to continue with the pair operating in a fashion not dissimilar to Zim and its Asian subsidiary Gold Star Line. No price has been mentioned. One container analyst commented that Wan Hai valuations are generally above average. 'The price to book is a 20-30% premium above market average,' one source noted.
Wan Hai's cash flow is much cheaper on an asset basis than before as the company has moved dramatically from chartering to owning. CMA CGM will be able to lay its hands on new tonnage as Wan Hai, owned by the Chen family, kicked off a large newbuild scheme in 2003 with four 6,000 teu ships, four 4,250 teu ones, two more 2,600 teu ships (from a series of six) all coming by 2008, which will take Wan Hai's fleet to around 80 and place it firmly in the top twenty global liners.
Wan Hai has traditionally been a port-to-port operator that has managed to post profits in market downturns unlike almost all of its peers. In 2005, Wan Hai posted a net profit of T$5.43bn ($166.68m) while turnover rose 8% to T$49.67bn.CMA CGM is currently the world's third largest in the world, and can boast being Wal-Mart's most favoured container line. Wan Hai was the target of a takeover bid by NOL at the turn of the century.
Three years ago another European owner picked up a Taiwanese container line. Hamburg Sud bought out the remains of the bankrupt Kien Hung. Since then the industry has undergone considerable consolidation with Hapag Lloyd taking over CP Ships and Maersk buying P&O Nedlloyd. Were CMA CGM to conclude the deal for intra-Asia specialist Wan Hai then the French line run by Jaques Saade would leapfrog MSC into second spot in the global container line rankings behind Maersk. [11/12/06]
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