CMA CGM has pulled out of the race for a minority stake (49%) in Rail Logistics Europe (RLE), which groups all of theFrench state railways SNCF’s rail freight interests, according to a report in the French media. Contacted by RailFreight.com, both CMA CGM and SNCF declined to comment.
The news of the French ocean shipping line withdrawing its shareholding bid has not come as a complete surprise to industry observers. Chairman and CEO Rodolphe Saadé expressed from the outset that he was only interested in a small proportion of RLE’s activities, most likely, those involved in the transport of maritime containers. This was underlined in a media interview he gave last month.
Personality clash
Such a position does not correspond with SNCF’s strategy which focuses on finding a shareholder partner ready to take a stake which encompasses the full range of RLE’s activities. “CMA CGM pulling out doesn’t surprise me. First of all, there appears to be personality clash between the two protagonists; SNCF chairman Jean Castex and Rodolphe Saadé. It seems that they have met on three occasions and that each time things went badly. Two strong egos, no doubt,” a source told RailFreight.com.
“Also, I think that SNCF has failed to realise that even if a multi-hundred million investment is a relatively minor sum for CMA CGM, it nevertheless entitles them to having a say in the governance of RLE – guarantees they didn’t get as Castex isn’t one to share power.”
Eyes on Naviland
The source noted that Saadé’s interest in RLE focused largely on Naviland Cargo (maritime containers), especially as the French group’s main ocean shipping rival MSC, is quickly building up its presence in this segment with its subsidiary, Medway. However, Naviland was not the only interest CMA CGM had in RLE, the latter also having considerable expertise in finished vehicle transport across Europe, which would’ve complemented that of CMA CGM’ logistics arm, Ceva, the source added.
Selling 49% of RLE’s capital was one of the conditions laid down in an agreement between the European Commission and the French state on the break-up of Fret SNCF which was suspected of receiving billions of euros in illegal aid.
CMA CGM’s withdrawal, means three candidates are left for the stake in RLE –Czech entrepreneur Daniel Kretinsky, German logistics group Rhenus and an unidentified private equity fund. France’s biggest rail freight player, RLE posted revenue for the first half of the year of €948 million, a year-on-year increase of 3.9%. EBITDA increased to €118 million versus €110 million, a year earlier, the margin improving from 12% to 12.5%.