By Dhirendra Tripathi
Investing.com – Maersk stock (CSE:MAERSKa) traded 0.1% lower Wednesday in Copenhagen in a lukewarm reaction to the company’s decision to buy Asian warehouse giant LF Logistics for around $3.6 billion, including lease liabilities.
According to Maersk, the deal implies a multiple of 14.4, based on enterprise value to earnings before interest, tax, depreciation and amortization.
The all-cash acquisition expands the shipping company’s capacity by around 70% to 549 warehouses globally, with a wide access to the world’s fastest-growing Asian market. Most customers are looking to grow in that region, Maersk said.
LF Logistics, an arm of Hong Kong supply-chain manager Li & Fung, has a large pool of global clients that Maersk will immediately be able to service with a wider bouquet of solutions. Maersk may pay out an additional $160 million based on LF Logistics’ future financial performance.
The pandemic, while wrecking global supply chains, also later brought a windfall for shipping companies as economies boomed and freight rates soared. Maersk reported a profit of $5.44 billion for the September quarter, more than five times the profit it had a year ago.
Maersk is now looking to deepen its business of carrying goods from ports to warehouses and then possibly extending it to offices and homes, businesses carrying higher margins.
It acquired HUUB in September, a Portuguese Cloud-based logistics start-up specializing in technology solutions for B2C warehousing. It’s also acquiring Germany’s Senator International to ramp up air-freight business.