Maersk to acquire logistics company in Asia Pacific

Danish shipping and logistics giant A.P. Moller – Maersk has reached an agreement to acquire 100% of the shares in LF Logistics, a Hong Kong-based contract logistics company.

LF Logistics, owned by Li & Fung (78.3%) and Temasek Holdings (21.7%), focuses on omnichannel fulfilment services, e-commerce, and inland transport in the Asia-Pacific region.

“The acquisition of LF Logistics is an important and truly strategic milestone on our journey to become the global integrator of container logistics; a global logistics company that provides digitally enabled end-to-end logistics solutions based on control of critical assets,” Soren Skou, CEO of Maersk, commented.

“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.”

As explained, LF Logistics, with its Asia-Pacific wide footprint and 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.

With the intended acquisition, 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.

As part of the agreement to acquire LF Logistics, Maersk will enter a strategic partnership with Li & Fung to develop logistics solutions.

LF Logistics operates an extensive Pan-Asian network and is the supply chain partner of choice for companies looking to grow in the Asia-Pacific region. LF Logistics specialises in B2B and B2C distribution solutions within retail, wholesale, and e-commerce.

“Maersk provides the ideal fit for our people and our customers. It has a substantial presence around the world and will utilize LF Logistics’ talent base and operational platform across Asia to build out its logistics and fulfillment offering globally… Together we will deliver a compelling value proposition that allows our people to attain their full potential and our customers to achieve sustainable competitive advantage,” Joseph Phi, CEO of Li & Fung and CEO of LF Logistics, said.

The transaction

The value of the transaction is $3.6 billion (enterprise value) post-IFRS 16 lease liabilities, reflecting a pre-synergy EV/EBITDA multiple of 14.4x based on estimated EBITDA for full-year 2021 for the ICL business.

In addition, an earn-out with a total value of up to $160 million related to future financial performance has been agreed as part of the transaction.

The acquisition is subject to regulatory approvals and is expected to close in 2022.

Until obtaining all required regulatory approvals and closing of the transaction, Maersk and LF Logistics remain two separate companies and thus will do their business as usual.

As part of the transaction to acquire LF Logistics, Maersk has entered a strategic partnership with Li & Fung to develop a comprehensive range of end-to-end global supply chain services with Li & Fung focusing on the upstream supply chain and Maersk focusing on the downstream supply chain.

Further, the parent company of Li & Fung is expected to retain and continue to build the GFM business following completion of the transaction.

Combining the businesses of Maersk and LF Logistics is expected to unlock substantial commercial synergies deriving from cross selling LF Logistics’ fulfilment products to Maersk customers, and cross-selling of Maersk’s logistics services within “Managed by” and “Transported by Maersk” to LF Logistics’ customers.

In addition, minor cost synergies are expected from combining the two businesses.