Maersk to Purchase LF Logistics for Round $3.6 Billion

A.P. Moller-Maersk AMKBY 0.26% A/S stated Wednesday it has agreed to purchase LF Logistics for round $3.6 billion together with lease liabilities, a transfer that may give the ocean transport big a community of warehouses.

Maersk, the world’s largest container transport line by capability, has been reaping the advantages of the rattled international provide strains which have pushed up ocean freight charges to file ranges this yr and prompted backlogs at U.S. ports.

California’s Port of Los Angeles is struggling to maintain up with the crush of cargo containers arriving at its terminals, creating one of many largest choke factors within the international supply-chain disaster. This unique aerial video illustrates the scope of the issue and the complexities of this course of. Photograph: Thomas C. Miller

It has been utilizing acquisitions to increase past ocean freight into inland logistics. It desires to seize a much bigger share of the market transferring items between Asian and U.S. ports, after which from ports into warehouses or companies and even the final mile to an individual’s residence.

By buying LF Logistics, an arm of Hong Kong supply-chain supervisor Li & Fung Ltd., Maersk positive factors management of a community of 223 distribution facilities throughout Asia and greater than 250 clients globally, in keeping with LF’s web site. LF additionally gives freight forwarding companies for retailers, producers and different cargo homeowners. The Wall Avenue Journal had beforehand reported a deal was close to.

The deal is anticipated to shut in 2022. It comes lower than six months after Maersk purchased two e-commerce logistics firms in August—one within the U.S. and one in Europe—for a complete of almost $1 billion. The acquisition of LF would dwarf these offers however the Copenhagen-based firm had already signaled its urge for food for larger acquisitions, bolstered by its sturdy earnings development.

Maersk reported a revenue of $5.44 billion for the September quarter, greater than 5 occasions the profitit had a yr in the past when outcomes had been weighed down by the financial slowdown ensuing from pandemic restrictions. Income jumped 68% to $16.61 billion, amid a surge in freight charges.

The LF deal is Maersk’s largest transfer to this point to spice up its inland logistics enterprise which it hopes will ultimately usher in half the group’s earnings. In the mean time, round 80% of income comes from ocean operations.

Maersk is paying greater than twice LF Logistics’s worth of $1.Four billion in 2019 when Singapore’s Temasek Holdings Ltd. acquired almost a 22% stake within the enterprise.

Maersk’s high competitor, Geneva-based Mediterranean Delivery Co. on Monday made a $6.Four billion supply to purchase the African logistics belongings of French-based conglomerate Bollore SE. If the deal goes by way of, it’s going to give MSC management of 16 terminals within the Ivory Coast, Ghana, Nigeria and Gabon together with three rail concessions.

France’s CMA CGM SA, the world’s fourth-largest container ship operator, purchased in 2019 Swiss-based freight companies supplier Ceva Logistics AG for $1.7 billion.

Maersk has round 70,000 ocean clients that embrace U.S. retail chains, automobile makers, furnishings suppliers, electronics makers and clothes importers. However lower than 1 / 4 of these clients use the corporate to maneuver their items from ports to warehouses and distribution facilities.

Maersk signed in early December a four-year contract with British-based shopper merchandise big Unilever PLC to handle ocean and airfreight transport.

Maersk’s final large acquisition was the 2017 buy of Hamburg Süd for $4.2 billion, which consolidated its place as a pacesetter in container transport.

Write to Ben Dummett at ben.dummett@wsj.com and Costas Paris at costas.paris@wsj.com

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Appeared within the December 22, 2021, print version as ‘Maersk Seeks Massive Logistics Buy.’

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