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Maersk to acquire Hong Kong-based LF Logistics for $3.6bn

The addition is pending regulatory approvals and expected to close next year

Maersk chief executive Soren Skou described the deal as ‘an important and truly strategic milestone’ on the company’s journey to become an integrator of global container logistics

MAERSK has agreed to buy LF Logistics in a deal worth $3.6bn to strengthen its strategy to expand beyond just ocean container shipping.

The purchase is pending regulatory approvals and expected to close in 2022.

The acquisition of the Asia-focused contract logistics firm, alongside its warehouse network, would expand the Danish giant’s supply chain capabilities for end-to-end services, the company said in an announcement.

“LF Logistics, with its Asia-Pacific wide footprint and industry leading fulfilment capabilities, matches Maersk’s strategic intent to support customers’ supply chain needs end-to-end as a trusted partner in control of the assets,” it said.

Founded in 1999 and boasting a network of 223 distribution centres in Asia, the logistic company says it handles more than 1m customer orders per week and serves more than 250 blue-chip clients globally.

It is now 78.3% owned by its Hong Kong-based parent Li & Fung and 21.7% by Temasek. The Singapore sovereign fund acquired its stake in 2019 for $300m, valuing the logistics arm at about $1.4bn at the time.

Maersk said the intended acquisition would push its existing warehouse portfolio to 549 globally with a combined space of 9.5m sq m. Chief executive Soren Skou described the deal as “an important and truly strategic milestone” on the company’s journey to become an integrator of global container logistics.  

“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,” he said.

As part of the deal, Maersk has also entered a strategic partnership with Li & Fung to develop a comprehensive range of end-to-end global supply chain services, with the latter focusing on the upstream supply chain and the former focusing downstream.

Li & Fung is also expected to retain and continue to build the carved-out global freight management business of LS Logistics following completion of the transaction.

“We recognise that for LF Logistics to be a global leader in the industry, achieving scale is of paramount importance. Maersk provides the ideal fit for our people and our customers,” said Li & Fung and LF Logistics chief executive Joseph Phi.

“It has a substantial presence around the world and will utilise LF Logistics’ talent base and operational platform across Asia to build out its logistics and fulfillment offering globally.”

LF Logistics is expected to report $250m in earnings before interest, tax, depreciation and amortisation on $1bn revenue for its in-country logistics business, which includes transport and warehousing services. That represents a growth of about 8.7% and 17.6%, respectively, from the year-ago level.

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