“This is a strategic move that will allow us to focus on improving our liner shipping business, while at the same time enabling APL Logistics to grow. The transaction will also strengthen our balance sheet and unlock value for our shareholders,” said Ng Yat Chung, Group President and CEO of NOL.

NOL said the sale follows “a robust and highly competitive process, and that the net proceeds of the sale will be applied to strengthen its financial position, including to repay its borrowings”.

For KWE the acquisition is part of a strategy to diversify its business. “We are very pleased to successfully enter into this transaction. Since 2013, we have laid out a strategy to strengthen our international presence especially in the US and Asia. This transaction fits right into our strategy,” said Satoshi Ishizaki, Group President and CEO of KWE. “We intend to retain the headquarters of APL Logistics in Singapore and to run it as a separate unit. We will also ensure that members of the group work together for the benefit of our stakeholders. We warmly welcome customers and employees of APL Logistics into our group. To them, I would like to give my assurance that when this transaction is completed, KWE will continue to invest in and expand APL Logistics’ services so as to serve our customers better, and to create exciting career growth opportunities for all employees of the KWE family.”

KWE has been in talks with NOL since November 2014, and gave its Representative Director the authority to negotiate a share and purchase agreement on 5 February. 

In its last earnings statement KWE reported its existing businesses in Singapore, Malaysia, Philippines and Thailand suffered a “slump”, and the company was looking to expansion to increase market share, with a focus on the “Power Lanes” around Asia. 

Acquiring APL Logistics is a step in that direction: “The KWE Group considers the establishment of a management base that can compete on a par with European and U.S. competitors in the global market to be one of the Group’s management priorities. In its Medium-Term Management Plan, released in May 2013, the entire Group is engaging in these measures.”

KWE expects that combining APL’s logistics services with its freight forwarding business will enable it to expand its market reach, as well as its service portfolio.  “By welcoming APLL into the KWE Group, we can expect to complement the KWEGroup’s freight forwarding services in terms of both commodities handled and regions for expansion, and we will be able to combine the logistics services and various high-value-added services that are the strengths of APLL with the air and sea freight forwarding services that the KWE Group is expanding globally, and these synergies will, in turn, make it possible to create new value and provide a broad range of optimized logistics services to customers” stated KWE.

The transaction is subject to NOL shareholder and relevant regulatory approvals.