Maersk Announces $3.6B Logistics Acquisition, Continuing its Expansion
A.P. Moller-Maersk is continuing to move forward rapidly with its strategy to grow into a global container logistics company announcing one of its largest acquisitions which will catapult the company to be among the largest global logistics companies. In a deal valued at $3.6 billion, Maersk has agreed to acquire LF Logistics, a Hong Kong-based contract logistics company, with capabilities within omnichannel fulfillment services, e-commerce, and inland transport in the Asia-Pacific region.
Supported by the record earnings from the shipping business, Maersk has made a series of investments to expand its logistics operations. It is part of a broader strategic vision for the shipping industry uniting the businesses to become an end-to-end solutions provider on the global supply chain. Last week, Maersk announced a new four-year agreement with consumer goods giant Unilever for an international freight supply chain management partnership.
The drive into the logistics side of the business has not been overlooked by others in the shipping business. Earlier this week it came out that MSC has made an offer of $6.4 billion to acquire Bolloré Africa Logistics, the transport and logistics activities in Africa. CMA CGM, Maersk, and Cosco were also believed to be in the bidding for Bolloré Africa Logistics. Maersk last summer announced plans to make acquisitions for the logistic business in Europe and North America and has been expanding its APM Terminals operation while other shipping companies have also been investing in terminal operations.
“The acquisition of LF Logistics is an important and truly strategic milestone on our journey to become the global integrator of container logistics,” 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.”
Since LF Logistics was founded in 1999, the company has grown rapidly. Today it operates a network of 223 warehouses with a capacity of 2.7 million sq. meters and approximately 10,000 employees across 14 countries in Asia-Pacific. A key supply chain partner for many multinational consumer brands in fashion, lifestyle, retailing, and consumer goods, analysts forecast revenues around $1 billion and earnings of more than $250 million this year.
Maersk told analysts that it expects to continue the rapid growth of the business projecting a doubling of revenues and profits from LF Logistics’ operations over the next four years. Integrating the operation will bring Maersk’s total number of warehouses to 549 globally, increasing capacity by 40 percent. Analysts said that Maersk will become the world's seventh-largest contract logistics company competing with industry leaders UPS and DHL.
“With this move, we will boost our warehousing and distribution offering and respond to the rapidly growing needs of our customers for contract logistics,” said Vincent Clerc, CEO of Ocean & Logistics at Maersk. “Guided by a customer-centric culture and well-executed operations, LF Logistics has built an unparalleled track record of executing a superior omnichannel strategy for customers, which is a unique position we can use to build and operate fulfillment to customers across our network.”
As part of the agreement to acquire LF Logistics, Maersk will also enter a strategic partnership with Li & Fung, current owners of the warehouse company, to develop logistics solutions. LF Logistics operates an extensive Pan-Asian network and is a leading supply chain partner for companies looking to grow in the Asia-Pacific region.
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.