Chinese Courier SF Eyes Stake in $5 Billion Kerry Logistics

SF Holding Co., one of the largest Chinese package-delivery services, is exploring a potential investment in tycoon Robert Kuok’s listed logistics business, people with knowledge of the matter said.

The Chinese courier is in talks to acquire roughly a 20% stake in Kerry Logistics Network Ltd., according to the people, who asked not to be identified because the information is private. Kerry Logistics shares have risen 38% in Hong Kong trading this year, giving the company a market value of about $5.4 billion.

Kerry Logistics is also considering selling several assets, including some warehouses, back to its parent company, the people said. Kuok, who is Malaysia’s richest person, controls the firm through his family holding company Kerry Group and its publicly-traded real estate arm Kerry Properties Ltd.

SF Holding is planning to buy a partial stake in a company to improve its capacity to offer logistics solutions, it said in an exchange filing on Friday, without naming any target. Its Shenzhen-traded shares will remain suspended for as many as five trading days.

Trading in Kerry Properties and Kerry Logistics was halted in Hong Kong on Friday, pending inside information announcement. Details of a potential transaction are still being discussed, and the structure of the deal could change, the people said.

An investment in Kerry Logistics would be “highly complementary” to SF Holding’s existing business strengths in express delivery and freight, said James Teo, an analyst at Bloomberg Intelligence.

Warehouses, Distribution

“SF could use Kerry’s extensive network of modern logistics facilities in China, spanning 22 million square feet, to bolster its growing domestic supply chain business,” Teo wrote in a research note Friday. “Kerry’s more international footprint may also aid SF’s future expansion as trade wars shift manufacturing from China to Southeast Asia, where Kerry also has a strong presence.”

Shares of SF Holding have nearly tripled over the past 12 months, helping the company surpass FedEx Corp. in value and giving it a market capitalization of about $75 billion. The group owns courier service SF Express, which has benefitted from the rise in online shopping in China fueled by companies like Alibaba Group Holding Ltd. and JD.com Inc. In 2019, SF Holding completed the acquisition of Deutsche Post DHL Group’s supply chain assets in China for 5.5 billion yuan ($850 million).

There’s no certainty the deliberations will lead to a transaction, the people said. Representatives for Kerry Group, Kerry Logistics and Kerry Properties didn’t respond to requests for comment.

Kerry Logistics provides warehousing, distribution and supply chain solutions to companies across Asia. Its offerings include air freight, trucking and ocean cargo services as well as customs brokerage and cross-border logistics for e-commerce companies.

Clients of Kerry Logistics include fashion brands, food and beverage distributors, consumer goods companies, electronics manufacturers and other companies throughout the region. The company also offers package delivery services in seven Asian markets under the Kerry Express brand, according to its website.

©2021 Bloomberg L.P.

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