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August 27, 2008

NOL sees risk in buying Hapag-Lloyd
Singapore's Neptune Orient Lines (NOL) has not yet decided whether to go through with a bid for Germany's Hapag-Lloyd and the market environment for a purchase has deteriorated, NOL's CEO was quoted by Reuters as telling a German newspaper.

NOL last month submitted an indicative bid for Hapag-Lloyd, the shipping arm of Germany's TUI, in a deal that would create the world's third-biggest container shipping group.

"We still have not decided whether we will definitely submit an offer," CEO Ronald Widdows was quoted as saying in German daily Die Welt in a preview of its Wednesday edition.

The paper said NOL would make a final decision by the end of September.

NOL and a group of Hamburg-based investors are the two bidders in the race for the world's fifth-largest container shipping group.

"The market is falling dramatically at the moment, making it ever more risky to buy an integrated company like Hapag-Lloyd," Widdows said.

Soaring fuel costs and a slowing world economy are dampening growth in the shipping industry. Widdows said Hapag-Lloyd would suffer from this like all other container shipping groups and that this needed observing.

He added however that NOL is still looking to expand through acquisitions.

Widdows also told German daily Frankfurter Allgemeine Zeitung in an interview that it was not clear whether TUI will sell the unit and signalled there was not likely to be a bidding war between NOL and the Hamburg group.

"If the consortium...offers more than us, then they will simply win," he said.

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