Danish logistics firm DSV is in advanced discussions to buy Schenker, the logistics unit of German state railway Deutsche Bahn (DB) - according to sources at the railway and the government. DSV could finalise the agreement, worth €14bn, by the end of this week. The deal would still require the approval of DB's supervisory board, which is primarily made up of government and union representatives.
The news will come as a disappointment to investor CVC Capital Partners, a firm also vying to buy DB Schenker. According to Bloomberg, CVC sent letters to DB's management and supervisory boards on Monday, hoping to win them over at the last minute. CVC's proposed deal, according to sources, would allow DB to retain a 24.9% stake in the Schenker unit for an investment of €1bn. CVC said this could deliver returns of €2bn to €2.5bn to DB.
"In the increasingly challenging economic and geopolitical situation, Germany cannot afford to lose another domestic and strategically important industrial champion," said CVC.
Labour union Verdi is notably backing CVC's deal, although it is allegedly lower than DSV's offer. A takeover by DSV would nonetheless lead to more job cuts, labour representatives argue.
DB is looking to sell Schenker, its most profitable division, to unlock investment for its domestic passenger business. The railway is also looking to reduce its €30bn of debt.
DSV and CVC declined to respond to Euronews' request for comment. A DB spokesperson said in an emailed statement: "The sales process for DB Schenker is confidential. Generally, we do not comment on bidders, details of discussions or the amount of bids."
"The main criterion remains that a sale must be economically advantageous for Deutsche Bahn. A decision on the sale of DB Schenker will be presented to the Supervisory Board of DB AG for final resolution at the end of the process. It also requires the approval of the Federal Government in accordance with the Federal Budget Code (BHO). Deutsche Bahn AG will provide information on the outcome in due course."
DSV's Bid for Schenker: A Strategic Move
DSV's move to acquire Schenker is a strategic one that will see the Danish company become the world's largest freight forwarder in terms of both volume and revenue. This will solidify DSV's position as a leader in the global logistics market. DSV has a proven track record of successfully integrating acquisitions, and it is expected to leverage its expertise to integrate Schenker into its existing operations seamlessly. The move will also allow DSV to expand its reach and access new markets, which will be crucial in a competitive market.
CVC's Counter Offer: A Bid to Maintain Influence
While DSV is reportedly the preferred bidder, CVC Capital Partners, a private equity firm, has also made a strong bid for Schenker. CVC's proposal would allow DB to retain a stake in Schenker, giving it a continued influence over the business. This could be a more attractive proposition for DB, as it would allow them to maintain a presence in the logistics market while receiving a significant financial return.
Job Security Concerns and The Role of Unions
The proposed sale has raised concerns about job security, particularly in Germany. Labor union Verdi is backing CVC's deal, claiming that DSV would lead to more job cuts. This highlights the complex dynamics between labor unions, management and the government in the sale of a strategically important company.
The Future of DB Schenker
The sale of Schenker marks a significant shift for Deutsche Bahn, as it focuses on its core passenger rail business. The acquisition by DSV will lead to a new chapter for the logistics giant, with the potential to create a global leader in the freight forwarding industry. However, the deal will also need to navigate complex challenges, such as job security, union negotiations, and regulatory approvals. The next few months will be crucial to see how the acquisition unfolds and what impact it will have on the global logistics market.
