EU to Okay $2.4 bln Box Shipping Deal

EU approval conditional on NOL pulling out from G6 alliance.

French shipping group CMA CGM's $2.4 billion takeover of Neptune Orient Lines is set to be cleared by the European Union's competition regulators, on condition that NOL pulls out from a rival shipping alliance, two people familiar with the matter said on Thursday.

CMA CGM, the world's third-biggest container shipping company, is looking to strengthen its position against bigger rivals Maersk Line and Swiss-based Mediterranean Shipping Co (MSC).

CMA CGM's plan to withdraw NOL from the G6 alliance, which competes with its own Ocean Three alliance, was able to address European Commission concerns, the people said.

Shipping alliances, which involve sharing vessels and routes to save costs, are seen as crucial to helping the industry deal with a severe market downturn.

The concession is similar to that offered by German container shipping company Hapag Lloyd and Chilean peer Compania Sud Americana de Vapores (CSAV) two years ago in return for the EU approving their tie-up.

European Commission spokesman Ricardo Cardoso declined to comment. CMA CGM had no immediate comment on the EU review. Its spokesman said the intention is for NOL to join the Ocean Three group, a four-way alliance unveiled on Wednesday.

An NOL spokeswoman declined to comment on the deal but said that NOL unit APL will remain in the G6 Alliance until the first quarter of 2017.

Ocean Three, whose members include CMA CGM, China's COSCO Container Lines, Evergreen Line and Orient Overseas Container Line, will focus on Asia routes. It has more capacity than the rival grouping of Maersk and MSC.
 

By Foo Yun Chee