Sunday, December 26, 2021

Maersk Goes Big On Warehouses: Buy's Li & Fung's Logistics Unit For $3.6B

A deep dive from SupplyChainDive, December 22:

The deal will grow Maersk's global warehouse footprint to more than 100 million square feet.

A.P. Moller - Maersk made one of its biggest deals to date on Wednesday with a $3.6 billion purchase of Li & Fung's Asia-Pacific logistics subsidiary, LF Logistics.

The all-cash deal comes with its usual bells and whistles. Maersk will purchase a 100% stake in LF Logistics, taking control of the Hong Kong-based company's in-country logistics and global freight management business units. The deal is expected to close in 2022, pending regulatory approvals.

But it also comes with a twist: After the deal closes, Li & Fung plans to acquire the global freight management unit back, in order to retain and grow it on its own terms.

Both Maersk and Li & Fung aim to be leaders in the end-to-end supply chain management space. But they have different capabilities, a fact which the two companies leaned into to make a deal work. In addition to the acquisition of LF Logistics, the two companies signed a "long-term strategic partnership" to work together on supply chain services for customers.

"With Li & Fung’s upstream digital and sourcing expertise and Maersk’s downstream logistics capabilities, we will begin to offer our respective customers the opportunity to take advantage of this unique end-to-end value chain proposition anchored upon operations excellence, technology, and sustainability," Spencer Fung, group executive chairman of Li & Fung, said in a statement.

For Li & Fung, it was more of a cash-rich divestment. The deal allows the company to shed logistics assets to grow its freight management and supply chain finance portfolio.

But for Maersk, documents disclosed to investors show it's a growth milestone that caps a year of acquisitions....


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