The Defense Logistics Agency (DLA) is losing $600 million to China because of a merger of two US logistics companies, according to a new report.
The merger between American Logistics and Cargill in 2014 created the biggest acquisition by a US military contractor since the merger of the Air Force in 1972, according a new Congressional Research Service (CRS) report.
The report says the DLA had been planning to acquire American Logistic and C&G Logistics as part of a joint venture, but the deal fell through due to concerns over Cargills stock price.
Cargill has struggled to make inroads in Asia and its acquisition of the American Logical Systems Group in 2015 was a big step towards consolidating the logistics industry in the US.
After the merger, American Logistical Group was valued at $2.9 billion and CAG’s acquisition of American Logic Group, which had already been valued at over $3 billion, was valued as $3.1 billion.
A DLA spokesman declined to comment on the report, citing ongoing litigation.
“DLA is currently evaluating all of its options for the future,” he said.