A.P. Moller - Maersk (Maersk) has announced the completion of its acquisition of LF Logistics, a Hong Kong-based contract logistics company in a deal valued at US$3.6 billion.
Maersk said as part of the deal, LF Logistics — which offers capabilities within omnichannel fulfilment services, e-commerce, and inland transport in the Asia-Pacific region — will be rebranded to the Maersk brand.
"Maersk in Asia has historically been primarily focused on ocean transportation out of Asia and related logistics services. Transporting and managing goods manufactured in Asia for consumer markets in the West and beyond. With the addition of LF Logistics, Maersk gains unique and best-in-class capabilities to serve the important and fast-growing consumer markets in Asia," said Ditlev Blicher, regional managing director of Asia Pacific at A.P. Moller - Maersk.
End-to-end logistics goal
"Furthermore, LF Logistics' expertise in omnichannel fulfilment positions us well with the global e-commerce market," Blicher added.
LF Logistics specialises in B2B and B2C distribution solutions within retail, wholesale, and e-commerce and Maersk noted that this will be a "strong base" for the company to expand within Asia-Pacific and globally.
Joseph Phi, Group CEO of Li & Fung and CEO of LF Logistics noted that Maersk's global presence provides an "ideal platform" for LF Logistics' next phase of expansion.
Following the acquisition, Maersk said it will add 223 warehouses to the existing portfolio, bringing the total number of facilities to 549 globally, spread across a total of 9.5 million square meters. LF Logistics had 223 warehouses end of 2021.
"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," the Danish shipping company said in its announcement.
The value of the transaction is US$3.6 billion (enterprise value) post-IFRS 16 lease liabilities, reflecting a pre-synergy EV/EBITDA multiple of 14.2x based on actual EBITDA for the full-year 2021 for the in-country logistics business.
Maersk noted that driven by the organic growth and commercial synergies, it is expected that revenue and EBITDA in the in-country logistics business will more than double by the end of the full-year 2026.
In addition, an earn-out with a total value of up to US$160 million related to future financial performance has been agreed upon as part of the transaction.
Maersk-Li Fung partnership
"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," Maersk announced.
Further, following separate regulatory approvals, the parent company of Li & Fung is expected to retain and continue to build the carved-out GFM business.
Maersk first announced that it has reached an agreement to acquire LF Logistics in December 2021.
