A.P. Moller – Maersk has reached an agreement to acquire LF Logistics, a Hong Kong-based contract logistics company, with premium capabilities within omnichannelfulfilment services, e-commerce, and inland transport in the Asia-Pacific region.

“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. 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.

LF Logistics, with its Asia-Pacific wide footprint and industry leading fulfilment capabilities, matches Maersk’s strategic intent to support customers’ supply chain needs end-to-end as a trusted partner in control of the assets. With the intended acquisition, Maersk will add 223 warehouses to the existing portfolio, bringing the total number of facilities to 549 globally, spread across a total of 9.5m square meters.

“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.

As part of the agreement to acquire LF Logistics, Maersk will enter a strategic partnership with Li & Fung to develop logistics solutions.

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. LF Logistics specialises 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.

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

About the transaction

The value of the transaction is USD 3.6bn (enterprise value) 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 USD 160m related to future financial performance has been agreed as part of the transaction. 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 and thus will do their business as usual.

As part of transaction to acquire LF Logistics, Maersk has entered a strategic partnership with Li & Fung to develop a comprehensive range of end-to-end global supply chain services with Li & Fung focusing on the upstream supply chain and Maersk focusing on the downstream supply chain. Further, the parent company of Li & Fung is expected to retain and continue to build the carved-out GFM business following completion of the transaction.

About LF Logistics

LF Logistics is a privately owned company by Li & Fung (78.3%) and Temasek Holdings (21.7%). LF Logistics is organized through two business units: In-Country Logistics (ICL) and Global Freight Management (GFM). Founded in 1999 LF Logistics is primarily focused on providing contract logistics solutions to customers in Asia-Pacific. LF Logistics is run as a standalone company separate from Li & Fung. Over the last 22 years, LF Logistics has significantly expanded its geographic presence, with an intention of providing integrated logistics solutions to customers across Asia-Pacific. LF Logistics employs 10,000 people and has 223 warehouses and fulfilment centres in 14 countries totalling 2.7million sq. meters.

In the full-year 2020 LF Logistics reported a revenue of around USD 1.3bn and a post-IFRS 16 adjusted EBITDA of USD around 235m, with the ICL business generating a revenue of around USD 850m and a post-IFRS 16 adjusted EBITDA of around USD 230m. For the full-year 2021 the ICL business is expected to report a revenue around USD 1bn with an adjusted post-IFRS 16 EBITDA around USD 250m.