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Maersk Expands Reach in Asia With $3.6 Billion LF Logistics Deal

A.P Moller-Maersk expects its deal for LF Logistics to close in 2022.
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A.P Moller-Maersk, the world's largest container shipping line by capacity, has agreed to purchase LF Logistics for about $3.6 billion including lease liabilities. 

The move would give the Copenhagen company an expansive network of warehouses in Asia. That in turn would give the company a boost during a time of supply-chain constraints, which have pushed up ocean-freight rates to record levels.

The deal will strengthen Maersk's logistics and services offerings to its customers by creating a "strong value proposition" for its clients targeting the Asian consumer segment, the company said. 

LF Logistics, based in Hong Kong, has a network of 223 warehouses, including 49 in China, and around 10,000 employees in 14 Asian countries. LF Logistics' land-based services -- warehousing and trucking -- have more than 250 global customers. 

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Maersk will cross-sell LF Logistics' fulfilment products to Maersk customers, providing synergy from the acquisition while the costs of that synergy are expected to be minimal. 

The acquisition is expected to close in 2022. 

"Today we mainly help our customers import from Asia, but with this acquisition we make a big bet on long-term growth in Asia and on offering our customers better access to the Asian consumer," Maersk Chief Executive Soren Skou said on a conference call, according to Reuters.

Businesses are dealing with record-high container freight rates as the pandemic and supply-chain snarls have caused congestion. 

Big companies are willing to pay a premium for shipping and warehousing in this environment, prompting some of the moves from big shippers like Maersk.