Maersk’s $ 3.6 b acquisition will open door for expansion offensive in both Asia and Europe

With the acquisition of Hong Kong company LF Logistics, Maersk will kill a few birds with one stone in its aim of transforming itself into a global transport and logistics company.

LF Logistics will open the door to the Asian logistics market for Maersk whilst providing the Danish group with a growth-oriented business platform, which can make Maersk acquisitions within logistics in Europe superfluous.

That was the message from Maersk management last week during a teleconference for stock analysts.

“With LF Logistics, acquisitions in Europe are not a must for us,” said Vincent Clerc, CEO for Ocean & Logistics at Maersk.

Maersk is buying LF Logistics with 10,000 employees and activities in 14 countries in Asia and the Pacific region for $ 3.6 billion.

Maersk management highlights LF Logistics’ IT platform along with a very loyal customer base as strong assets in Maersk’s transformation of its business from traditional shipping to integrated logistics.

Maersk needs to strengthen its logistics business in Asia and Europe and Vincent Clerc describes LF Logistics as a “high-quality growth engine”, which Maersk “expects to expand into Europe”.

“We are looking for well-run companies with a scalable platform,” he said, emphasising that LF Logistics is one such company.

Maersk expects that the Hong Kong business’s ability to grow outside of its own core market can be used to open doors to the European logistics market.

According to Maersk CEO Søren Skou, Maersk has been looking at LF Logistics for a long time because of the company’s capability both to expand and make money.

On the strength of LF Logistics and the purchase of the German air freight company, Senator International, earlier this year, Maersk is set to increase its logistics business turnover by approximately 

$2 billion a year.

“The LF acquisition is very important for us strategically,” says Søren Skou.

Søren Skou said that the higher price Maersk is paying reflects amongst other things that Maersk will gain control of the company and is not just buying a share as Temasek did.

Another industry expert, container analyst Lars Jensen, sees the purchase of LF Logistics as the start of a major wave of acquisitions with shipping companies such as CMA CGM and Maersk at its center.

“The question is not whether we will see more major acquisitions across the global logistics market in 2022 – the question is rather how many we will see,” Lars Jensen writes on Linkedin, referring to shipping, logistics and port companies with ambitions to become global logistics groups.

In his view, 2022 “should be seen as a foundational year where the major players position themselves for the battle of the global logistics market”.

According to Maersk management, the market should not expect a flurry of Maersk acquisitions to continue even if the group has been active on the acquisition front this year.

Maersk is still reportedly following its “organic first” strategy and will only acquire companies that can contribute competencies that Maersk needs but does not have at its disposal.

“As long as we can grow organically that is the most value generating growth we can have,” says Søren Skou.

LF Logistics is worth a great deal to Maersk as it supplies Maersk with competencies which the Danish company does not have and which they can use in all of their markets.

“We bought LF because they’re the best,” adds Vincent Clerc.

The acquisition of LF Logistics is subject to the approval of the authorities, and Maersk expects that the deal will fall into place in 2022.