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Maersk / LF Logistics: deal makes the main sender more powerful

The world’s largest cruise ship enjoys the seas of peace and tranquility. The cost of transporting goods in containers is very high because the global financial crisis is getting worse. Maersk is doing everything in its power to ensure that the winds continue to blow with their recent acquisition.

The Danish giant will buy LF Logistics, Li & Fung’s Hong Kong international freight forwarding unit, for $ 3.6bn. It should give Maersk a new way to earn money from the railways. But the alliance will also make Maersk, a member of the world’s leading powers, the most powerful.

Li & Fung is shrinking like Maersk wax. It was once the world’s largest manufacturing company. However, the $ 3.6bn price of LF Logistics is more than double what Li & Fung himself made at a cost of $ 930m last year. Li & Fung has been caught in the last decade, failing to adapt to online changes in the acquisition and distribution of consumer goods. The deal provides an opportunity for a successful exit.

The project puts Maersk on a whim. Land transport is scarce, which gives Maersk the power of timber through a network of more than 200 destinations in Asia, including China, Singapore and Australia.

LF Logistics is located in Hong Kong, an important Asian port and maritime hub that oversees trade to and from China. Its assets include shipping, customs and trade and wholesale operations.

Combining this can help Maersk in Asia, reduce costs. The domestic trading business, priced at a price of up to 14.4 times, should be on the Maersk high line, about 80 percent of which is calculated by sea traffic. Maersk’s 70,000 customers, comprising of the world’s largest corporations, are expected to benefit from smaller business operations around the world.

On the other hand, the acquisition will also strengthen Maersk’s market power.

There is already a strong focus on international solidarity and the huge responsibility it gives members. The US spent two years investigating the high cost of transportation. It closed the case without filing charges in 2019.

Competing officials, angry with the rising tide of shipping, would do well to take a closer look at this purchase. Maersk shares have risen by two-thirds this year. A recent conference suggests that transportation costs should be higher, either at sea or on land.

Lex approves FT’s Due Diligence letter, which is a brief description of the world of integration and acquisition. Dinani Pano to register.


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