Maersk acquires LF Logistics for billions
AP Moller - Maersk has agreed to buy LF Logistics, a Hong Kong-based contract logistics company for US$3.6 billion to boost the shipping giant's presence across Asia.
The acquisition of LF Logistics will transform Maersk into a global integrator of container logistics, providing digital end-to-end logistics solutions to customers worldwide, Soren Skou, CEO of Maersk said in a statement.
Maersk will add 223 warehouses to the existing portfolio, bringing the total number of facilities to 549 globally, spread across a total of 9.5m square meters.
"With the acquisition of LF Logistics, we add critical capabilities in Asia Pacific to support our customers' long-term growth in Asia Pacific as well as capabilities and technology we can scale in our contract logistics business globally,” Skou said.
The acquisition comes as the world’s biggest container shipping line is poised to report record profits this year, driven by a surge in freight rates amid a global supply-chain disruption caused by the Covid-19 pandemic.
As part of the deal, Maersk and Li & Fung will also forge a strategic partnership to create a comprehensive range of end-to-end global supply chain services for their customers.
LF Logistics, which is 78.3% owned by Li & Fung and 21.7% owned by Singapore government’s investment firm Temasek Holdings, processes more than 1 million orders per week for over 250 clients globally across 223 distribution centers in China and around the region, according to its website.
The transaction is expected to be completed in 2022, subject to regulatory approvals.
Based on Maersk’s purchase price, LF Logistics’ valuation has more than doubled since the Temasek deal valued the business at $1.4 billion back in 2019.
“The divestment of LF Logistics will further simplify our business to focus on our core trading and supply chain digitalization capabilities, which have seen a strong rebound back to pre-Covid levels,” Spencer Fung, Li & Fung group executive chairman, said in a separate statement.
“With Covid causing major supply chain disruptions, the importance of a diverse global supply chain network is more pronounced than ever, and Li & Fung is well-positioned to serve our customers through our network of 50 export markets.”