JD Logistics Adds to Mainland Shipping Empire with $1B Buy of Freight Manager
Hong Kong-listed JD Logistics is expanding its shipping network on the mainland amid a region-wide boom in the sector, having entered an agreement to buy a 66.5 percent stake in Shanghai-based Deppon Logistics for RMB 8.97 billion ($1.4 billion).
The logistics arm of Beijing-based JD.com will be paying RMB 13.15 per share, representing a 3.9 percent premium to Deppon’s latest closing price on 25 February, to acquire the Shanghai-listed company, according to a filing with the Hong Kong stock exchange in mid-March.
“(Deppon) is one of the leading logistics companies in the PRC, with well established existing logistics infrastructure, clientele, network and systems,” JD said in the announcement. Given Deppon’s strong service capability and customer base, the buyout sets JD up for expanding its products to boost the group’s integrated supply chain services. The acquisition would also strengthen JD’s existing logistics network coverage, optimise cost structure and improve customer experience, the statement read.
JD.com has been expanding its logistics network in recent months, with its latest acquisition taking place less than a year after its property division agreed to acquire a 26.38 percent stake in China Logistics Property Holdings for HK$3.99 billion (then $513.45 million).
Under the agreement, JD Logistics will buy a 99.99 percent equity interest in the holding company of Deppon Logistics, which is an integrated, customer-centred logistics company that provides a wide range of solutions, such as delivery and warehousing management. Other services include less-than-truckload (LTL) transport — a shipping service for businesses that need frequent transport of smaller loads of goods — and full truckload (FTL) transport.
Upon completing the transaction, the holding company will become a subsidiary of JD Logistics, and its financial results will be consolidated into the company’s financial statements, according to JD’s stock exchange announcement.
Parent company JD.com has been “investing heavily (for years) in its logistics and supply chain infrastructure”, credit rating agency S&P Global said in a news release published last November. “This has given the entity better control over supply chains while its competitors were hit with outages.”
As of last June, Deppon reported to have over 30,000 logistics hubs in China, covering almost all counties and districts in the country with 143 distribution centres covering more than 1.8 million square metres, according to the announcement from JD, which noted that Deppon also owned more than 15,000 vehicles.
E-commerce giant JD.com has just seen its full-year net revenue for 2021 rise 27.6 percent year-on-year to RMB 951.6 billion, while its net revenue in the fourth quarter was RMB 275.9 billion, representing a 23 percent year-on-year increase from the same period in 2020.
In March 2021, some six months before the acquisition of China Logistics Property Holdings, JD.com agreed to invest a total of $800 million into newly issued ordinary shares of Chinese on-demand delivery company Dada Nexus, and in return gained about a 51 percent stake in the company.
In August 2020, JD Logistics entered a deal to acquire a controlling interest in an air freight and logistics company, Kuayue Express, for a consideration of RMB 3 billion.