HNA Group in Talks for Stake in Singapore Logistics Firm CWT

  • No certainty discussions will lead to a deal, CWT says
  • Acquisition would be latest in a series for HNA Group

HNA Group Co., the Chinese conglomerate that controls the country’s fourth-largest airline, is in exclusive talks with the biggest shareholder of CWT Ltd. for a potential acquisition of shares in the Singapore-based logistics company.

There is no certainty that the negotiations will result in an agreement, CWT said Monday. The company’s shares rose after the announcement, giving it a market value of S$1.28 billion ($935 million). Bloomberg News reported May 6 that HNA had approached C & P Holdings Pte to express interest in a possible bid for control of CWT.

A deal would add to consolidation in the logistics industry and a series of acquisitions by HNA group, whose assets are valued at more than 600 billion yuan ($92 billion) and range from airlines and hotels to department stores and supermarkets. The owner of Hainan Airlines Co. said last month it will buy Swiss airline-catering company Gategroup Holding AG for 1.4 billion francs ($1.4 billion) and agreed to purchase closely held Carlson Hotels Inc., gaining hospitality brands including Radisson and Park Plaza.

“This is yet another acquisition within one of their current business areas,” Zhang Qi, an analyst at Haitong Securities Co. in Shanghai. “They are very ambitious and it’s not quite possible to achieve so much growth organically. They are acquiring to get up to scale quickly.”

Industry Consolidation

Logistics companies in Asia, mainly from Japan, have been leading a consolidation in the sector in the past two years. Japan Post Holdings Co. bought Australian operator Toll Holdings Ltd. for A$6.49 billion ($4.7 billion) while Kintetsu World Express Inc. purchased APL Logistics Ltd. for 144.2 billion yen ($1.3 billion), giving them more international exposure.

HNA can’t comment as the companies are in negotiations, and will provide updates when there is more information, the group said in an e-mailed response to a query from Bloomberg News.

CWT climbed 0.9 percent to close at S$2.14 in Singapore trading, extending its gains this year to 11 percent.

HNA, based on a tropical island in southern China dotted with beach resorts, runs businesses that also include insurance firms, ship repairs, logistics and airports that generated combined revenue of nearly 190 billion yuan last year, according to its website.

Airplane Leasing

HNA’s leasing arm in January completed the acquisition of Avolon Holdings Ltd. at an enterprise value of $7.6 billion, forming the world’s fourth-largest aircraft lessor by asset value. Tianjin Tianhai Investment Co., a Shanghai-traded affiliate of HNA, announced a $6 billion takeover of U.S. software distributor Ingram Micro Inc. in February.

CWT, founded in 1970, employs about 6,000 people and offers services including commodity logistics, freight forwarding, warehousing and defense procurement, according to its website. It also controls MRI Group Pte, a trader of base metals and petroleum products, and helps manage Cache Logistics Trust, which owns industrial property in Singapore, Australia and China.

The company this month said its first-quarter net profit fell 19 percent to S$23.7 million, while revenue declined 14 percent to S$1.9 billion.

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