A.P. Moller - Maersk (Maersk) announced that it has reached an agreement to acquire LF Logistics, a Hong Kong-based contract logistics company, with capabilities within 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 provide digitally enabled end-to-end logistics solutions based on control of critical assets," said Soren Skou, CEO of Maersk.
“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 added.
End-to-end logistics
The shipping giant noted that 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.
"With this move, we will boost our warehousing and distribution offering and respond to the rapidly growing needs of our customers for contract logistics. Guided by a customer-centric culture and well-executed operations, LF Logistics has built an unparalleled track record of executing a superior omni-channel strategy for customers, which is a unique position we can use to build and operate fulfilment to customers across our network," said Vincent Clerc, CEO of Ocean & Logistics at Maersk.
As part of the agreement to acquire LF Logistics, Maersk said it 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 said LF logistics' deep customer relations and operational excellence is a strong base for Maersk to expand within Asia-Pacific and globally.
"We recognize 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. 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," said Joseph Phi, CEO of Li & Fung and CEO of LF Logistics.
US$3.6B deal between Maersk, LF Logistics
Maersk said in a statement that value of the transaction is US$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 US$160 million related to future financial performance has been agreed as part of the transaction.
Maersk said the acquisition is subject to regulatory approvals and is expected to close in 2022.
"Until obtaining all required regulatory approvals and closing of thetransaction, Maersk and LF Logistics remain two separate companies and thus will do their business as usual," the shipping giant said, adding that as part of 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 carved-out GFM business following completion of the transaction.