Kintetsu World Express Set To Buy APL Logistics for $1.2 Billion

Japanese freight carrier Kintetsu World Express is set to buy Singapore’s APL Logistics for about 140 billion yen ($1.2 billion), the Nikkei daily reported, the latest Japanese firm to turn to overseas deals amid slow domestic growth.

Tokyo-headquartered Kintetsu Express said on Tuesday that it agreed to pay 144 billion yen ($1.21 billion) to buy all of APL’s shares from its parent, Neptune Orient Lines (NOL). Its own capital and bank loans will be used to fund the deal, it said.

At the close of Tokyo trading, Kintetsu Express was worth $1.5 billion by market value. As of end-December, it had current assets of 119 billion yen, including 50 billion in cash and deposits.

Singapore’s Neptune Orient Lines (NOL) had been trying to sell its APL Logistics division for more than $750 million, people familiar with the matter previously told Reuters.

CJ Korea Express Corp, South Korea’s largest logistics firm, had also been interested in a deal, according to a regulatory filing in October.

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APL Logistics booked $74.5 million in EBITDA (earnings before interest, taxes depreciation and amortization) in 2013, and sources had said Neptune was looking to sell it at between 10 and 12 times that amount, or between $750 million and $900 million.

The expected APL Logistics deal value is far higher than the $750 million to $900 million range that sources said Singapore-based NOL had been looking for. Such a range would have valued the unit at 10 and 12 times its earnings before interest, taxes depreciation and amortization for 2013.

The price tag may confound skeptics who had suggested offers for APL Logistics could be closer to $600 million, due to weak global freight rates.

Kintetsu Worldwide Express said it was attracted by APL Logistics’ international reach, and expertise in offering logistics services for the automobile 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 said in a statement.

NOL’s Group President and CEO Ng Yat Chung said the deal would help the company focus on improving its liner shipping business and improve its balance sheet.

Trading in NOL shares was suspended, while Kintetsu Express shares closed 4.6 percent lower after a Nikkei report on the deal.

NOL said Citi and HSBC were its financial advisers while Nomura Securities advised Kintetsu Express.

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