A/S said Wednesday it has agreed to buy LF Logistics for around $3.6 billion including lease liabilities, a move that would give the ocean shipping giant a network of warehouses.
Maersk, the world’s largest container shipping line by capacity, has been reaping the benefits of the rattled global supply strains that have pushed up ocean freight rates to record levels this year and caused backlogs at U.S. ports.
It has been using acquisitions to expand beyond ocean freight into inland logistics. It wants to capture a bigger share of the market moving goods between Asian and U.S. ports, and then from ports into warehouses or businesses and even the last mile to a person’s home.
By acquiring LF Logistics, an arm of Hong Kong supply-chain manager Li & Fung Ltd., Maersk gains control of a network of 223 distribution centers across Asia and more than 250 customers globally, according to LF’s website. LF also provides freight forwarding services for retailers, manufacturers and other cargo owners. The Wall Street Journal had previously reported a deal was near.
The deal is expected to close in 2022. It comes less than six months after Maersk bought two e-commerce logistics companies in August—one in the U.S. and one in Europe—for a total of nearly $1 billion. The acquisition of LF would dwarf these deals but the Copenhagen-based company had already signaled its appetite for bigger acquisitions, bolstered by its strong earnings growth.
Maersk reported a profit of $5.44 billion for the September quarter, more than five times the profitit had a year ago when results were weighed down by the economic slowdown resulting from pandemic restrictions. Revenue jumped 68% to $16.61 billion, amid a surge in freight rates.
The LF deal is Maersk’s biggest move so far to boost its inland logistics business which it hopes will eventually bring in half the group’s earnings. At the moment, around 80% of revenue comes from ocean operations.
Maersk is paying more than twice LF Logistics’s value of $1.4 billion in 2019 when Singapore’s…
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