China E-Commerce Giant JD To Acquire Courier Company Deppon For $1.4 Billion

JD Logistics, the logistics arm of the Chinese e-commerce giant JD.com, is buying a majority stake in domestic courier company Deppon Logistics for 9 billion yuan ($1.42 billion).

In the transaction announced in a Sunday filing to the Hong Kong stock exchange, JD Logistics will acquire 99.99% of the shares in Deppon Holdco, which has a roughly 66.5% share in Deppon Logistics. JD Logistics will also make an offer for Deppon Logistics shares that are not held by Deppon Holdco for 13.15 yuan per share.

JD Logistics is China’s largest integrated supply chain service company in terms of total revenue. Last year, in Hong Kong’s second-largest listing, the company raised $3.2 billion.

The acquisition of Deppon Logistics will expand JD Logistics capability amid the e-commerce boom that resulted from the lockdown measures that were intended to curb the pandemic. Deppon is an integrated logistics company in China that provides Less-Than-Truckload (LTL) transportation, Full Truck Load (FTL) transportation, delivery services, and warehousing management.

Boosted by booming digital business, revenue for JD Logistics increased 43% last year to 104.7 billion yuan ($16.4 billion). However, it recorded a loss of 15.6 billion yuan ($2.4 billion), nearly four times the previous year’s loss of 4 billion yuan ($629 million).

As of the end of 2021, JD Logistics operated more than 1,300 warehouses, had over 7,200 delivery stations and employed more than 200,000 in-house delivery personnel. The company says 90% of JD Group’s online retail orders were fulfilled with same-day or next-day deliveries.

JD also has a stake in ESR Cayman, Asia’s largest property manager. ESR is increasing its physical assets in line with Asia’s digital boom, adding data centers, logistics hubs and warehouses.

Increasing the import and export of various products and materials should boost the road freight transport market in China. The market is projected to reach $970.6 billion in 2026, according to a report in March by Dublin-based Research and Markets.

JD was founded by Richard Qiangdong Liu, currently the company’s chairman and chief executive officer. In November 2021, Liu was ranked 28th on Forbes China’s richest list, with a net worth of $17.6 billion.