Maersk is on the verge of buying LF Logistics for approximately $ 3 billion

AP Möller-Maersk AMKBY 0.26%

A / S is in advanced talks to acquire LF Logistics for approximately $ 3 billion, according to those familiar with the matter.

An announcement could be made as early as Wednesday, provided the talks don’t break off, people said.

Maersk, the world’s largest container shipping company by capacity, is benefiting from global delivery bottlenecks, which have pushed ocean freight rates to record levels this year and led to backlogs in US ports.

It uses acquisitions to expand beyond ocean freight into inland logistics. It wants to capture more market share by moving goods between Asian and US ports, and then from ports to warehouses or businesses, and even down the last mile to a person’s home.

With the acquisition of LF Logistics, a branch of Hong Kong’s supply chain manager Li & Fung Ltd., Maersk is taking control of a network of 223 distribution centers across Asia and more than 250 customers worldwide, according to LF’s website. LF also provides freight forwarding services to retailers, manufacturers, and other freight owners.

The deal was supposed to last less than six months after Maersk bought two e-commerce logistics companies in August – one in the US and one in Europe – or nearly $ 1 billion in total. The LF acquisition would dwarf those businesses, but the Copenhagen-based company had already signaled its appetite for larger acquisitions, supported by its strong earnings growth.

Maersk reported profits of $ 5.44 billion for the September quarter, more than five times profits a year ago when results were weighed down by the economic slowdown caused by pandemic restrictions. Revenue rose 68% to $ 16.61 billion amid a surge in freight rates.

The LF deal would be Maersk’s biggest step yet to kickstart its inland logistics business, which it hopes will eventually generate half of its net income. Currently around 80% of sales come from maritime transport.

At around $ 3 billion, Maersk will pay LF Logistics more than double the value of $ 1.4 billion in 2019 when Temasek Holdings Ltd. from Singapore acquired almost 22% of the shares in the company.

Maersk’s largest competitor, Geneva-based Mediterranean Shipping Co., made a $ 6.4 billion offer on Monday to purchase the African logistics facilities of French conglomerate Bollore SE.

If the deal goes through, MSC will gain control of 16 terminals in Ivory Coast, Ghana, Nigeria and Gabon, as well as three rail concessions.

The French CMA CGM SA, the fourth largest container shipping company in the world, bought the Swiss-based freight service provider Ceva Logistics AG for 1.7 billion US dollars in 2019.

Maersk has around 70,000 ocean customers, including US retail chains, automakers, furniture suppliers, electronics manufacturers, and clothing importers. But fewer than a quarter of these customers use the company to transport their goods from ports to warehouses and distribution centers.

Maersk signed a four-year contract with British consumer goods giant Unilever PLC in early December to manage sea and air freight transport.

Maersk’s last major acquisition was in 2017 when it bought Hamburg Süd for US $ 4.2 billion, cementing its position as a leader in container shipping.

Write to Ben Dummett at [email protected] and Costas Paris at [email protected]

Copyright © 2021 Dow Jones & Company, Inc. All rights reserved. 87990cbe856818d5eddac44c7b1cdeb8

Appeared in the print edition of December 22, 2021 as “Maersk is looking for a major logistics purchase”.

About Christine Geisler

Check Also

Lifeboat drill went awry, 2 injured, partly from corroded equipment, safety panel found

The Transportation Safety Board (TSB) has completed its investigation into a lifeboat accident that seriously …