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Hong Kong-based contract logistics company LF Logistics is the latest acquisition of Maersk as it seeks inroads into Asia Pacific inland transport
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Deal gives the ocean shipping giant a network of 223 warehouses in Asia, boosting its global facilities to 549 totalling 9.5 million square meters
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LF Logistics will be rebranded to Maersk as result of the takeover
Maersk completed its US$3.6 billion buyout of LF Logistics on August 31, adding to its assets the Hong Kong-based contract logistics company with premium capabilities within omnichannel fulfilment services, e-commerce, and inland transport in Asia Pacific.
The deal will give the ocean shipping giant a network of 223 warehouses in Asia, including one along Ortigas Avenue Extension in Pasig City, Philippines, and boost its footprint in inland logistics. That enlarges Maersk’s total facilities to 549 globally, spread across 9.5 million square meters.
LF Logistics will be rebranded to Maersk following the takeover, Maersk announced at the deal completion in Copenhagen.
“With the addition of LF Logistics, Maersk gains unique and best in class capabilities to servicing the important and fast-growing consumer markets in Asia. Furthermore, LF Logistics’ expertise in omnichannel fulfilment positions us well with the global e-commerce market,” said Ditlev Blicher, Maersk regional managing director of Asia Pacific.
Maersk, mover of about 20% of the world’s containers on its ships, has been benefitting from the global supply chain chaos that drove up ocean freight rates to record levels last year and caused backlogs at US ports, Asian Wall Street Journal reported earlier.
Awash with cash, Maersk has been acquiring assets to expand beyond ocean freight into inland logistics and air freight, aiming to capture a bigger market share moving goods between Asian and US ports and from ports into warehouses, or even the last mile to customers’ homes.
On June 2, Maersk completed its US$644 acquisition of global air freight forwarder Senator International, widening its array of products to customers.
“We are buying a company that can serve our customers by providing goods to physical stores and also deliver goods to the door of the consumer that are bought online,” Maersk chief executive Soren Skou told WSJ an interview some time ago. “LF Logistics can do both and it can do it in Asia in a big way.”
LF Logistics has 10,000 employees, operates an extensive pan-Asian network, and is the supply chain partner of choice for firms looking to grow in Asia Pacific, Maersk said. The firm specialises in B2B and B2C distribution solutions in retail, wholesale, and e-commerce.
It has a track record of deep customer relations and operational excellence, which is a strong base for Maersk to expand within Asia Pacific and globally.
Joseph Phi, CEO of both Li & Fung Group and LF Logistics, said his firm has an enviable track record of profitable growth in the region for over 20 years. He said Maersk’s global presence provides an ideal platform for the next phase of organizational expansion and development.
The transaction value is US$3.6 billion, LF Logistics’ enterprise value post-IFRS accounting of 16 lease liabilities, reflecting a pre-synergy EV/EBITDA multiple of 14.2x based on actual EBITDA for full-year 2021 for the in-country logistics business.
An earn-out with a total value of up to US$160 million related to future financial performance has been agreed as part of the transaction.
As part of the deal to acquire LF Logistics, Maersk has entered into a strategic partnership with Li & Fung to develop a comprehensive range of end-to-end global supply chain services with L&F focusing on the upstream and Maersk on the downstream.
