AP Moller-Maersk has agreed a deal worth up to $3.76bn to buy Asian logistics giant LF Logistics.

The all-cash deal will see the Danish carrier significantly expand its integrated logistics services as it steps up effort to directly serve customers in the Asia and Pacific regions.

Maersk will make an initial $3.6bn payment to acquire LF Logistics, a Hong Kong-based company which provides contract logistics solutions in the Asia Pacific.

The carrier has also agreed a $160m earn-out provision to be paid to the sellers based on future financial performance.

LF Logistics is privately owned by Li & Fung (78.3%) and Temasek Holdings (21.7%).

It operates with 10,000 employees and 223 warehouses in 14 countries.

'Omnichannel' capability

Maersk CEO Soren Skou referred to the potential to scale up the "omnichannel" channels, a type of retail which integrates the different methods of shopping to customers.

He told a conference call today that the omnichannel capabilities would be scalable outside of Asia and Pacific and would be the foundation for future organic growth in Europe and elsewhere.

He added there would also be significant commercial synergies with other Maersk businesses.

"The acquisition of LF Logistics is an important and truly strategic milestone on our journey to become the global integrator of container logistics," Skou said.

These would help Maersk provide digitally enabled end-to-end logistics solutions based on control of critical assets," he added.

Setting a trend

The deal is the latest of several deals Maersk has completed over the past two years, building out its overall integrated logistics solutions.

Previous deals have included air freight, digital solutions and freight forwarding.

Those acquisitions reflect "the significant cash generation in today market and aims to move into higher margins parts of the supply chain", according to Norwegian investment bank Fearnley Securities.

LF Logistics operates an extensive Pan-Asian network that specialises in business-to-business (B2B) and business-to-consumer (B2C) distribution solutions within retail, wholesale, and e-commerce.

Vicent Clerc, CEO of ocean and logistics at Maersk, says the acquisition of LF Logisitics will boost warehousing capacity. Photo: AP Moller-Maersk

The Hong Kong company provided a strong base for Maersk to expand those capabilities within Asia-Pacific and globally.

The acquisition is subject to regulatory approvals and is expected to close in 2022.

That will result in Maersk adding 223 warehouses to its existing portfolio, bringing the total number of facilities to 549 globally.

Joseph Phi, CEO of LF Logistics, said that achieving scale was of "paramount importance" for his company to be a global leader.

Maersk has "a substantial presence around the world and will utilise LF Logistics' talent base and operational platform across Asia to build out its logistics and fulfilment offering globally".

Maersk has in recent years acquired a number of non-shipping businesses.

In 2020, it picked up US-based warehousing and distribution company Performance Team and KGH Customs Services of Sweden, a specialist in trade and customs management services in Europe.

The company celebrated record third-quarter earnings last month by splashing out $644m on a takeover of German freight forwarder Senator International