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Maersk in Asian expansion with $3.6bn with Li & Fung logistics acquisition

Photo: Wikipedia Commons HK_LiFungTower.jpg
AP Moller – Maersk continues its aggressive expansion into the wider supply chain acquiring the contract logistics business of Li & Fung Group in a $3.6bn deal.

It seems barely a day goes by without a cash rich container line making another logistics space foray. Maersk’s latest acquisition is Asia focused with it buying Hong Kong-headquartered LF Logistics.

It continues the Danish giant’s focus on the e-commerce sector and described LF Logistics as having “premium capabilities within omnichannel fulfilment services, e-commerce, and inland transport in the Asia-Pacific region”.

While previous acquisitions have been largely focused on Europe and North America LF Logistics strength is very much in Asia.

The deal will result in major growth in Maersk’s global warehousing capabilities adding 223 facilities bringing its worldwide total to 549 with an area of 9.5m sq metres.

“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,” said Soren Skou, CEO of Maersk.

As part of the agreement to acquire LF Logistics, Maersk will enter a strategic partnership with Li & Fung to develop logistics solutions with Li & Fung focusing on the upstream supply chain and Maersk focusing on the downstream supply chain. Li & Fung is will maintain and is expected to grow its global freight management business.

“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.

The transaction has an enterprise value of $3.6bn and is expected to close in 2022 subject to regulatory approval. LF Logistics is owned 78.3% by Li & Fung and 21.7% by Singapore sovereign wealth fund Temasek Holdings.

Joseph Phi, Group CEO, Li & Fung and CEO, LF Logistics, said, “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.”

Phi will stand down as CEO of LF Logistics on completion of the deal and remain as Group CEO of Li & Fung.

 

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