Japan’s Kintetsu Express to Acquire APL Logistics

By Ritsuko Ando and Saeed Azhar

TOKYO/SINGAPORE, Feb 17 (Reuters) – Japanese freight service Kintetsu World Express Inc is shopping for Singapore’s APL Logistics for $1.2 billion, paying the next than anticipated value for an abroad deal at a time of gradual home progress.

Tokyo-headquartered Kintetsu Express mentioned on Tuesday that it agreed to pay 144 billion yen ($1.21 billion) to purchase all of APL’s shares from its dad or mum, Neptune Orient Lines (NOL) . Its personal capital and financial institution loans can be used to fund the deal, it mentioned.

At the shut of Tokyo buying and selling, Kintetsu Express was value $1.5 billion by market worth. As of end-December, it had present belongings of 119 billion yen, together with 50 billion in money and deposits.

Kintetsu Express joins Japanese firms starting from beverage maker Suntory Holdings Ltd to telecom agency SoftBank Corp in asserting main offers all over the world for the reason that begin of 2014 to counteract sluggish buying and selling in Japan, typically paying hefty premiums.

In the most recent high-profile instance, digicam and workplace gear maker Canon Inc made a proposal final week value $2.83 billion for Swedish community video surveillance agency Axis AB, proposing to pay a premium of almost 50 p.c to Axis’s earlier closing share value.

The anticipated APL Logistics deal worth is much larger than the $750 million to $900 million vary that sources mentioned Singapore-based NOL had been on the lookout for. Such a spread would have valued the unit at 10 and 12 occasions its earnings earlier than curiosity, taxes depreciation and amortisation for 2013.

The price ticket might confound sceptics who had urged affords for APL Logistics may very well be nearer to $600 million, resulting from weak international freight charges.

It was not instantly clear whether or not there was aggressive bidding. CJ Korea Express Corp, South Korea’s largest logistics agency, had additionally been enthusiastic about a deal, based on a regulatory submitting in October.

Kintetsu Express mentioned it was attracted by APL Logistics’ worldwide attain, and experience in providing logistics companies for the auto and retail industries.

“By welcoming APL Logistics to our group, we expect to bolster our international air freight services in terms of both geography and products that we handle,” it mentioned in an announcement.

NOL’s Group President and CEO Ng Yat Chung mentioned the deal would assist the corporate deal with bettering its liner transport enterprise and enhance its stability sheet.

Trading in NOL shares was suspended, whereas Kintetsu Express shares closed 4.6 p.c decrease after a Nikkei report on the deal.

NOL mentioned Citi and HSBC have been its monetary advisers whereas Nomura Securities suggested Kintetsu Express. ($1 = 118.8100 yen) (Editing by Stephen Coates, Kenneth Maxwell and Muralikumar Anantharaman)