A container with Maersk logo Photo: Courtesy of Maersk

Global shipping conglomerate A.P. Moller-Maersk (Maersk) announced on Wednesday the completion of its acquisition of LF Logistics, a Hong Kong-based contract logistics company, underlining the importance that the company is putting on the Asian region for its global supply chain, with China being a key player, against the backdrop of lingering challenges in the global shipping industry posed by geopolitical conflicts, inflation and other factors.

Speaking at the completion of the acquisition, Ditlev Blicher, Regional Managing Director of Asia Pacific at Maersk, expressed excitement about the deal, saying that the acquisition will significantly change Maersk's footprint as an organization in Asia, an increasingly important market for the firm.

"Maersk in Asia has historically been primarily focused on ocean transportation and related logistics services, transporting and managing goods manufactured in Asia for consumer markets in the West and beyond...with the addition of LF logistics, Maersk gains unique and best in class capabilities to servicing the important and fast-growing consumer markets in Asia," Blicher said, in a statement sent to the Global Times on Wednesday.

"This is the largest acquisition we made in a number of years. We will have almost 20,000 new talents working for the organization, and that will bring us to roughly 30,000 just in Asia, not counting the Indian subcontinent," Blicher told the Global Times in a video interview.

Following the acquisition, Maersk will add 223 warehouses to its existing portfolio, bringing the firm's total number of facilities to 549 globally, spread across a total of 9.5 million square meters, according to the company.

LF Logistics specializes in B2B and B2C distribution solutions within retail, wholesale, and e-commerce and has a track record of deep customer relations and operational excellence, which is a strong base for Maersk to expand within Asia-Pacific and globally, the company said.

In the wake of the global supply chain challenges driven by geopolitical conflict, inflation, epidemic and weak consumption across major economies, the Asian market has remained relatively resilient in terms of both supply chain, e-commerce and market potential.

"The volatility hits us just like it does to any other organizations, which has led to certain degree of inefficiency," Blicher said, noting that from network point of view, the company will then need to reconfigure their network and reposition their assets just like many of their customers have done.

Recognizing the importance of the Chinese and the Asian market, Blicher said that the company will continue to develop and make investments in the region, which includes collaborating with partners while looking for acquisitions where they feel there are suitable options.

"We see China and Asia as holding a critical position in the global supply chain, whether it is for manufacturing hub or consumption or R&D," Blicher noted.

The value of the transaction is $3.6 billion (enterprise value) post-IFRS 16 lease liabilities, reflecting a pre-synergy EV/EBITDA multiple of 14.2x based on actual EBITDA for full-year 2021 for the in-country logistics business, according to Maersk.

Driven by organic growth and commercial synergies, it is expected that revenue and EBITDA for the in-country logistics business will more than double by the end of full-year 2026 as the company's statement addressed.

In addition, an earn-out with a total value of up to $160 million related to future financial performance has been agreed as part of the transaction, the company said.