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CMA CGM in $5.5 Billion Logistics Deal

CMA CGM Group has committed to buy the logistics operations of French conglomerate Bolloré Group for an enterprise value of 5 billion euros ($5.5 billion).

With an acquisition, the combined operations of CMA CGM Group’s logistics activities and Bolloré Logistics would have generated total revenues of approximately $24 billion based on 2022 results.

This is CMA CGM’s latest acquisition since starting a 2021 buying spree. Its freight management and contract logistics subsidiary Ceva Logistics acquired supply chain solutions company Ingram Micro Commerce & Lifecycle Services for approximately $3 billion. It also took on last-mile delivery and pickup firm Colis Privé and automotive logistics company Gefco.

“For the CMA CGM Group, this acquisition would represent a major step forward in its development of a full range of solutions supporting customers’ supply chains through handling end-to-end transport and logistics,” the company said in a statement, noting that it has been developing its logistics activities since 2019.

CMA CGM also has extended its role at major U.S. ports via acquisitions, first acquiring the Fenix Marine Services terminal in the Port of Los Angeles in November 2021 in a $2.3 billion deal, and then acquiring two major terminals at the Port of New York & New Jersey at the end of 2022.

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The acquisition spree mirrors that of Maersk as both freight giants are looking to expand their horizons into services beyond ocean freight. With Maersk and Mediterranean Shipping Company (MSC) ending their 2M freight alliance in 2025, it appears the heavy hitters in the container shipping industry are rethinking how they collaborate in vessel-sharing agreements—resulting in stronger incentive to diversify their offerings.

With Bolloré Logistics, CMA CGM aims to strengthen its sea and air freight core competencies. Its logistics division generated $4.6 billion in revenue in the fourth quarter and $16.1 billion in 2022 overall. This represents revenue increases of 32.9 percent and 47.6 percent amid the continued expansion of business.

Between Ceva Logistics and Bolloré, the subsidiaries would have an annual shipping volume equivalent of more than 2 million 20-foot equivalent units (TEUs) of sea freight and 0.8 million tons of air freight.

Across all of its operations, CMA CGM Group can carry 3.4 million TEUs in total across a fleet capacity of more than 600 vessels. The company already has the third-largest market share of global container capacity at 12.9 percent, according to data from shipping research tool and database Alphaliner as of May 9. MSC leads the way in current market share at 18.4 percent, ahead of Maersk’s 15.5 percent share.

Beyond container shipping CMA CGM’s warehouse space would increase by more than 9.7 million square feet across 115 newly acquired warehouses, in addition to the 110.9 million square feet already managed by Ceva at its 900 global warehouses. The acquisition would also open up access to major logistics hubs, especially in France and Asia.

Bolloré Logistics operates in nearly 150 countries, including more than 80 partners and 360 locations. The company largely offers transport and logistics solutions for the luxury goods, fragrances and cosmetics, healthcare, aerospace and defense sectors, and employs roughly 15,000.

The acquisition has not been finalized. The ocean carrier giant said in a statement that it granted Bolloré a put option, which gives the logistics giant the right, but not obligation, to sell the business.

If finalized, the deal would be the largest since the CMA CGM Group was founded in 1978.

The companies announced on April 18 that they began exclusive negotiations. If Bolloré exercises the put option, the sale will then be subject to regulatory approval and could be completed in the first half of 2024.

CMA CGM’s first-quarter issues were similar to what Maersk reported, namely declining volume and sales. To close 2022, CMA CGM saw revenue decline 3.6 percent to $16.9 billion and a net income of approximately $3 billion.

Total volume fell 5.4 to 5.15 million TEUs carried, with revenue from shipping dropping 13.1 percent to $12.4 billion.

“The balance between supply and demand is expected to remain challenging [in 2023], as capacity is expected to increase—in both maritime shipping (easing of port congestion, delivery of new vessels) and air freight (return of passenger belly capacity),” the company said in a statement. “At the same time, demand prospects seem uncertain (dealer inventory destocking in the U.S., consumer purchasing power under pressure).”

For Bolloré, this is the second major divestment to a container shipping titan over the past year, with the conglomerate selling its Bolloré Africa Logistics arm to MSC for $6.1 billion. This gave MSC a much larger stronghold on the continent, with the company also taking over terminal operations in countries including India, Haiti and East Timor.

Under that deal, MSC gained access to 16 container terminals and seven roll-on/roll-off terminals designed to carry wheeled cargo at ports across Africa. MSC now has a presence in 47 countries in Africa and manages all administrative and customs procedures for its customers both before and after transportation, for import and export. The company also manages the carriage of goods to their final destination.