A.P. Moller-Maersk A/S has agreed on the second-largest takeover in its history with the purchase of an Asian warehouse giant.
Maersk, the world’s biggest container line, is to pay US$3.6 billion in enterprise value for Hong Kong-based LF Logistics (利豐物流), it said yesterday. The deal is second only to its US$4 billion takeover of Hamburg Sued in 2017.
Maersk, which transports about one-fifth of the world’s containers at sea, is pursuing a new strategy to expand in land-based logistics where there is more potential for growth and profit margins are higher.
Photo: Reuters
Earlier this year, Maersk, based in Copenhagen, also announced plans to buy air-freight company Senator International GmbH as it seeks a presence in all parts of the transport chain.
With the purchase, Maersk gets an additional 10,000 employees and more than 200 warehouses in 14 countries. Maersk would boost annual revenue in its logistics and services business by about US$1 billion with the acquisition.
The sellers are Li & Fung Ltd (利豐), which owns 78.3 percent of LF, and Temasek Holdings Pte, which has the rest. Maersk said it is paying a multiple of 14.4, based on enterprise value to earnings before interest, tax, depreciation and amortization.
The deal comes as Maersk is making record profits from a surge in freight rates. The price for transporting containers has skyrocketed as bottlenecks in the global supply chain have, in effect, removed about 15 percent of the world’s shipping capacity. Maersk is set to book net income of US$17 billion this year, or six times the result for last year, according to analyst estimates.
The acquisition excludes LF’s freight-forwarding unit, which would remain with the owners. Maersk has previously said it would not pursue freight forwarders, but would instead focus acquisitions on companies with logistics assets or specialized technology.
The transaction is expected to close next year, pending regulatory approvals.
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