Maersk to Acquire LF Logistics, Expanding End-to-End Supply Chain Portfolio in Asia

Seeking to bolster its end-to-end logistics solutions in Asia, A.P. Moller – Maersk has announced a deal to acquire Hong Kong-based LF Logistics in a deal valued at $3.6 billion.

Maersk said the acquisition of LF Logistics, with its wide Asia-Pacific footprint and industry-leading fulfillment capabilities, fits with its strategy of providing end-to-end supply chain needs of its customers. The acquisition will add 223 warehouses to Maersk’s existing portfolio, bringing the total number of facilities to 549 globally, spread across a total of 9.5 million square meters.

“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 Maersk CEO Soren Skou. “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.”

For Maersk, the acquisition is the latest as part of its strategy to expand beyond its core ocean shipping business and into an integrated transport and logistics company, offering end-to-end supply chain solutions.

LF Logistics is a privately owned by Li & Fung and Temasek Holdings, holding 78.3% and 21.7%, respectively. The company is organized in two business units; In-Country Logistics (ICL) and Global Freight Management (GFM).

As part of the agreement, Maersk will enter a strategic partnership with Li & Fung to develop logistics solutions, where Li & Fung will focus on the upstream supply chain and Maersk focusing on the downstream supply chain.

Maersk explains that 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. The company specializes in B2B and B2C distribution solutions within retail, wholesale, and e-commerce. “LF logistics’ deep customer relations and operational excellence is a strong base for Maersk to expand within Asia-Pacific and globally,” Maersk said.

“We recognize that for LF Logistics to be a global leader in the industry, achieving scale is of paramount importance,” said Joseph Phi, CEO of Li & Fung and CEO of LF Logistics. “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. This is testament to the strength of our team, our unique operations-centric culture, and superb growth potential. 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.”

Looking at the details, the enterprise value of the transaction is $3.6 billion 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.

The acquisition is subject to regulatory approvals and is expected to close in 2022. Maersk and LF Logistics remain two separate companies until closing.

In the FY2020, LF Logistics reported a revenue of around $1.3 billion and a post-IFRS 16 adjusted EBITDA of around $235 million, with the ICL business generating a revenue of around $850 million and a post-IFRS 16 adjusted EBITDA of around $230 million. For the FY2021, the ICL business is expected to report a revenue around $1 billion with an adjusted post-IFRS 16 EBITDA around $ 250 million. The company employs 10,000 people and has 223 warehouses and fulfillment centers in 14 countries totaling 2.7 million square meters.

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