Rumours are emerging about the sale of Schenker by Deutsche Bahn. A just released report from the news organisation Bloomberg claims to have knowledge of the bidders and how much they are offering.
Amongst what it calls a “handful of confirmatory bids” for Schenker, Bloomberg asserts that “according to people familiar with the matter” there is one leading offer from a combination of two financial companies, CVC Capital Partners plc and Carlyle Group. The report says that the offer “could fetch more than €15 billion” but then goes on to state that CVC Capital Partners and Carlyle Group have submitted a joint bid of “around €14 billion”. There also seems to be some implication that the two companies are attempting to draw on funds from the Abu Dhabi Investment Authority and Singapore sovereign wealth fund, GIC, “according to the people”.
Bloomberg suggests that the logistics companies DSV, Maersk and MSC have placed bids for Schenker but that these are lower than those of CVC and Carlyle.
It is unclear where these reports originate from. Caution should be exercised when reading reports concerning these sorts of transactions as it is hard for any but a few participants to gain an accurate picture of the whole process. There may also be a temptation for some of the participants to influence the process by briefing journalists. However, the price of €15bn does seem to be reasonable and it would be unsurprising for private equity companies to bid for such an asset.
It is also worth noting that Deutsche Bahn is coming under pressure to consider the position of another of its ‘logistics’ subsidiaries, DB Cargo. Not only is DB Cargo loss making but it is accused by private rail freight companies of unfair competition due to Deutsche Bahn’s continued injections of cash to keep DB Cargo viable. Deutsche Bahn announced earlier this year an extensive restructuring of DBCargo.
Deutsche Bahn is under considerable pressure to improve its financial position which is characterised by a considerable level of debt and heavy expenditures in infrastructure. The Deutsche Bahn that may emerge in a few years’ time could look quite different to that of today. Its exposure to freight transport could be quite low.
Author: Thomas Cullen
Source: Ti Insight
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