Deutsche Bahn AG, Germany’s national railway operator has taken the first concrete steps to prepare for a potential sale or listing of its DB Schenker logistics unit, which could be around 20 billion euros (US$23 billion), reports Bloomberg News.
“The government-owned company is working with a consultant and legal advisers to ready the business for a possible transaction later this year. Options being considered range from a full or majority stake sale, to the potential disposal of a minority holding or an initial public offering,” the Bloomberg news statement read that quoted anonymous sources.
News has it that Carlyle Group Inc. and CVC Capital Partners are in talks to team up on a bid, while Advent International and Bain Capital as well as Blackstone Inc. may also seek to team up.
“Though the German government hasn’t made a final decision on whether to pursue a sale, buyout firms,” Bloomberg noted.
However, industry sources and business analysts say any takeover by private equity could result in the company being broken up – a move unlikely to be welcomed by the German government.
Danish transport giant DSV are said to be interested, while Bloomberg also sees Germany’s Deutsche Post AG and Switzerland-based Kuehne + Nagel as possible buyers.
Importantly, after bottom-up analyses, as well as executives warning of the intrinsic challenges of merging asset-heavy companies with trading-based outfits, IPO may be the most viable outcome, but it all depends upon the German state who is going to decide it all.
The hullabaloo around a potential sale is the result of the change of government in Germany. Along with political changes, the forwarding landscape is also changing.
“The chances of Germany’s government selling state-owned assets and company stakes increased after the three-party coalition agreed late last year to name Christian Lindner of the pro-business Free Democrats as finance minister. He’ll have to win over Chancellor Olaf Scholz’s Social Democrats, who rely strongly on union voters, as well as the Greens. But given their broad agreement on significant investments required to expand and improve Deutsche Bahn’s rail network to help combat climate change, there is a reasonable chance they’ll accept at least a partial sale, people familiar with the matter have said,” Bloomberg stated.
Schenker, like other transport and logistics firms, has gained in value during the COVID-19 pandemic. The unit reported record first-half operating profit of nearly 630 million euros in 2021 on the back of high demand for logistics services. Meanwhile, revenues at Deutsche Bahn have been hit by COVID; the holding company reported an operating loss of 975 million euros for the period, only revealing DB Schenker as the group’s crown jewel.