Li & Fung, Ltd. entered into a transaction for shipping giant Maersk to acquire its logistics business, LF Logistics Holdings Limited (LF Logistics) and its various entities, valuing the business at $3.6 billion on an enterprise value basis.
Subject to regulatory approvals, the transaction is expected to close in 2022.
Li & Fung also agreed to form a long-term strategic partnership with Maersk to enable both companies to use their respective resources and global networks to create a range of end-to-end global supply chain services.
LF Logistics is jointly owned with Temasek, the Singapore sovereign wealth fund (Li & Fung holds 78.3 percent, and Temasek holds 21.7 percent of the company), and is a logistics services provider offering contract logistics services across Asia and freight management services worldwide. The company has registered double-digit growth over the past decade and has a track record in e-logistics and omnichannel fulfillment.
The strategic partnership follows the recent formation of LFX, focusing on digital ventures, investments and supply chain finance with GLP, its Singapore-based partner.
Spencer Fung, group executive chairman, Li & Fung said, “We are very pleased to have reached this agreement with Maersk. The divestment of LF Logistics will further simplify our business to focus on our core trading and supply chain digitalization capabilities, which have seen a strong rebound back to pre-COVID levels. With COVIDE causing major supply chain disruptions, the importance of a diverse global supply chain network is more pronounced than ever, and Li & Fung is well-positioned to serve our customers through our network of 50 export markets. 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.”
Commenting on the intended transaction, Joseph Phi, group CEO, Li & Fung and CEO, LF Logistics, said, “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 to build out logistics and fulfillment offering globally. This is testament to the strength of our team, our unique operations-centric culture, and superb growth potential.”
“We are excited, and we look forward to strengthening our global logistics business and welcoming 10,000 new logistics experts from a customer-centric culture with well-executed operations. With the intended acquisition of LF Logistics, we will bring in an extensive warehousing network covering the fast-growing Asia-Pacific markets; all underpinned by a best-in-class operational and technology platform which we can scale globally across our network. We are impressed by the way LF Logistics has built a track record of executing a superior omnichannel strategy for customers, which is a strength we can use to build and operate fulfillment to customers across our network,” said Vincent Clerc, CEO, Ocean & Logistics, Maersk.
As part of the strategic partnership, the parent company of Li & Fung is expected to acquire and continue to build the Global Freight Management (GFM) business following the completion of the transaction. Until the closing of the transaction LF Logistics and Maersk remain two separate independent companies.
Photo courtesy LF Logistics
