According to media reports, the railway authority has decided who to sell its logistics subsidiary DB Schenker to. Danish transport company DSV is believed to have won the €14 billion deal. The supervisory board still has to approve it.
Danish company DSV A/S is said to be a strong contender in the bidding for DB Schenker, Deutsche Bahn’s logistics subsidiary. As reported by several media outlets citing sources familiar with the situation, the logistics group is currently in serious discussions with the support of the railway administration.
“Spiegel” and news agencies Bloomberg and Reuters reported that the DB Schenker acquisition deal could be signed this week.
The European Commission would also have to agree.
DB Schenker will have to go to DSV for around 14 billion euros, government and company representatives told Reuters last night. A preliminary deal is expected to be signed on Friday. The sale still has to be approved by the supervisory board, which will hold a special meeting for this purpose. The European Commission must also approve the deal.
So the Danish DSV wins over the remaining bidder, financial investor CVC, who reportedly offered a slightly lower amount, according to negotiating sources. The railways have not commented officially on the status of the negotiations.
Unions fear staff cuts
“We generally do not comment on bidders, details of discussions or bid amounts,” a Bahn spokesman said. The fact remains that a sale must be economically advantageous for the railway. A DSV spokesman also said the company does not generally comment on market rumours.
The Ver.di union recently opposed the sale to DSV, arguing that a merger with a rival would result in more jobs being lost. The staff of the railway company’s supervisory board also seems to be taking this position. However, the owner side, the states with their federal government representatives, could still win.
higher Need for investment
The steering committee, made up of the ministers of state from the Traffic Light Union, approved the sale of DB Schenker last Friday. Reuters, citing insiders, has already reported that it favors DSV.
Competitor CVC recently re-advertised in the newspapers, promising that the Schenker brand would be preserved. There were also suggestions that the federal government or the railway company could initially hold a 24.9% stake in DB Schenker. The component could then be sold in an IPO, with a multi-billion dollar valuation.
The financial investor also wrote that the railway authority had confirmed DB Schenker’s annual investment requirement of 1 billion euros. However, CVC would put more effort into the company. “In an increasingly challenging economic and geopolitical situation, Germany cannot afford to lose a domestically and strategically important industrial champion.” There was a risk of an economic burden of at least 2 billion euros.
DSV promises more jobs in the medium term
DSV countered this with its own report, specifically on the topic of jobs: it has up to 1,000 more jobs than its rival CVC, but in the short term there will be cuts. In the medium term, more people will be working in the relevant institutions than at present.
Schenker employs around 15,000 people in Germany and over 70,000 people worldwide at around 1,850 locations in more than 130 countries.
The railway company is looking to sell off DB Schenker, its most important profit generator, to focus on its troubled core business in Germany and cut its debt burden of more than 30 billion euros.
