A NEW force in global shipping is set to emerge if a reported deal involving Singapore's Neptune Orient Lines (NOL) proves correct.

The deal would see NOL sold to German shipping and travel giant TUI, the Financial Times (FT) reported on Tuesday.

The paper quoted unnamed sources close to the companies as saying that Temasek Holdings, which owns 68 per cent of NOL, could sell that stake to TUI-owned shipping giant Hapag-Lloyd.

In exchange, the Singapore state investment company could take a share in TUI which, at current valuations, could amount to as much as 23 per cent of the enlarged group, the report said.

TUI is the world's fifth-largest container shipping group. It also controls TUI Travel, Europe's biggest tourism company.

NOL currently ranks as the world's eighth-largest container shipping group.

A merger of Hapag-Lloyd and NOL would combine the United States and African routes of the German group with the Asian routes of its Singaporean counterpart.

A Temasek spokesman said Temasek would not comment on market speculation.

In recent months, Temasek has been active in overseas deals. Last month, it upped its stake in British bank Standard Chartered to 19 per cent.

At the end of last year, it was lead investor in a deal to recapitalise troubled Wall Street bank Merrill Lynch, injecting US$4.4 billion (S$6.2 billion) for a nine per cent stake.

Read the full report in Thursday's edition of The Straits Times.