China’s SF Holding makes $2.27b play for Kerry Logistics

Kerry SF
Dick Wong, chairman of SF Holding (middle left); Hua Kuok, chairman of Kerry Logistics Network (middle right); William Ma, group managing director of Kerry Logistics Network (left); and Jeffrey Chan, chief strategy officer of SF Holding.
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SF Holding, one of China’s largest express package delivery companies is set to take a majority stake in Hong Kong-based Kerry Logistics Network.

The HKD 17.6 billion (USD 2.27 billion) deal represents a 51.5 per cent stake in Malaysian tycoon, Robert Kuok’s global logistic company at a cash offer price of HKD 18.80 per share. Kuok is Malaysia’s richest individual with a net worth estimated at USD 10.6 billion as of July 2020, according to Forbes.

 

Kerry says the majority stake investment by SF, “will bring together the core competencies of SF Holding and Kerry Logistics Network across multiple verticals to create a leading Asia-based global logistics platform to meet ever-changing demands”.Kerry Logistics

As part of the deal, Kerry Logistics Network’s warehouse assets in Hong Kong will be disposed of to a wholly-owned subsidiary of Kerry Holdings to unlock its shareholder value. The move will also enable Kerry Logistics Network to operate under an ‘asset-lighter’ model comparable to international industry peers, the company said in a statement.

The logistics company is part of Kuok’s family-owned holding company, Kerry Group, and its Hong Kong-listed real estate arm Kerry Properties. Following the deal, Kerry Properties will hold a 20 per cent stake in the logistics company, down from 40 per cent currently.

To facilitate the transaction, the Kerry Logistic Network business in Taiwan, including the interest in Kerry TJ Logistics Company, which is listed on the Taiwan Stock Exchange, will also be sold to a wholly-owned subsidiary of Kerry Holdings Limited in compliance with Taiwanese regulations. Proceeds from the Taiwan business sale will be retained by the company for its ongoing growth and developments.

Kerry Logistics Network will be positioned as SF Holding’s platform for international business with the two also collaborating in Greater China to better align their respective businesses, Kerry adds.

“By tapping into different customer segments, SF Holding and Kerry Logistics Network will coexist as separate entities in Mainland China, Hong Kong, and Macau. The Company will continue to grow its logistics businesses, both in terms of scale and coverage.”

SF airlinesThe Shenzhen-based express logistics provider is the second-largest courier service provider after China Post, and also offers traditional express, heavy freight, cold chain service, international business, and intra-city express services.

SF Holding also owns and operates a fleet of 62 freighters – through its SF Airlines subsidiary – including, B737s, B757s, B767s, and two B747s. SF Express has grown rapidly on the back of e-commerce growth in China, carrying packages for companies like the Alibaba Group, and JD.com across China and the Asian region.

In 2019, SF Holding acquired Deutsche Post DHL Group’s supply chain assets in China, Hong Kong and Macau for CNY 5.5 billion (USD 855 million).

The two companies say they expect the partnership will “create significant synergies to boost both companies’ growth and leadership in the logistics sector with clear business focuses and complementary strengths to bring value to investors”.

Kerry Logistics Network’s listed status on the Hong Kong Stock Exchange will remain unchanged and the Kerry Group of companies will still hold a significant interest in the logistics company, which will continue to operate under the ‘Kerry’ names with a clear brand identity and be managed by its current core leadership team across all markets, the company says.

The deal is subject to the successful disposal of the Hong Kong warehouses and Taiwanese business, shareholder and regulatory approvals.

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