NOL To Buy GATX Logistics For $210M

Tuesday, January 09, 2001
Shares of Singapore shipping and logistics firm Neptune Orient Lines (NOL) rose 7.5 percent on Tuesday, buoyed by its deal to buy U.S.-based GATX Logistics for $210.5 million in cash. "They (NOL) have always said logistics is going to be a growth area for them. So, having made a significant acquisition, people tend to look at it positively because they are moving in the right direction," said Seah Hiang Hong, head of research at Kim Eng Securities. NOL said the acquisition would boost revenues for the group's unit APL Logistics -- the vehicle used to buy GATX -- by 70 percent or more than $300 million. GATX, owned by GATX Corp. until last June, is the second largest warehouse-based contract logistic company in the United States with about 21 million sq ft of warehousing space. NOL said the completion of the deal was expected to take place during the first quarter of this year. An analyst at a local bank said profit figures for the U.S. company were not available, but the price paid appeared reasonable. "It is a fair price on the assumption that the company makes a net margin of about five to seven percent, which would equate it to an entry price-to-earnings multiple of about 18 times, which is fair for a logistics company," the analyst said. "We have a fair value of S$2.30 and have maintained a buy."
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