This operation should help reduce the debt of the German rail operator, which last year posted a net loss of 2.35 billion euros.
Danish logistics provider DSV, the third largest in the sector, has been chosen to acquire its German rival Schenker, a subsidiary of Deutsche Bahn, in a 14.3 billion euro deal that should help reduce the debt of the crisis-hit German rail operator, the two companies announced on Friday.
“With this acquisition, we are bringing together two strong companies, creating a global leader in transport and logistics,” said Jens Lund, CEO of DSV, founded in 1976, in a statement.
Together, the two companies, present in more than 90 countries, have a combined turnover of almost 40 billion euros and some 147,000 employees. They will be among the heavyweights in the sector alongside groups such as DHL, UPS and Fedex.
30 billion euros of debt
German railway company Deutsche Bahn (DB) launched the sale of its logistics subsidiary, the group’s most profitable activity, at the end of 2023 in order to help reduce its colossal debt of more than 30 billion euros, while the company faces a need for massive investments in its aging network, undermined by dysfunctions.
DSV “plans investments of around one billion euros in Germany over the next three to five years,” DB said in a statement on Friday.
Its boss Richard Lutz, quoted in the text, notes that the debt reduction “will contribute substantially to the financial viability” of the public railway company, 100% owned by the German state. “Over the next three years, the focus will be on the structural clean-up of the infrastructure, railway operations and profitability” of the group, he adds.
Deutsche Bahn posted a net loss of 2.35 billion euros last year, a tenfold increase in the past year.
The sale of Schenker was played out between DSV and a consortium led by the fund CVC Capital Partners. “DSV came out on top with the offer that was clearly the most economically advantageous for Deutsche Bahn,” the public operator assured on Friday.
SNCF Freight: an uncertain future
An investigation by the European Commission into the support provided to the wholly-owned subsidiary of SNCF over the period 2007-2019, and in particular the cancellation of its 5.3 billion euro debt, could lead to the outright bankruptcy of the company.
In order to avoid this situation, the government has proposed a discontinuity plan providing for the creation of a new entity that will retain 80% of the activity, the remainder to be transferred to competitors who currently represent 30% of the traffic and 20% of the turnover of Fret SNCF. This will result in the elimination of 470 jobs.
This new entity will still be majority-controlled by the SNCF, therefore public, but could be opened up capital-wise to other public or private companies. Will the plan presented by the government allow the new SNCF Freight to get back on track? The unions doubt it, as does the SNCF management, which is demanding investment.
The government, which is still planning to double the modal share of rail compared to road and waterways by 2030, announced, in parallel with the announcement of the plan, that it would invest an additional 4 billion euros between 2023 and 2032 in infrastructure and an increase in aid for the sector of up to 200 million per year until 2030. But as is often the case, the financing of this plan has not been specified, which leaves the SNCF in a state of expectation, all the more so because of the current political uncertainty.
Olivier Chicheportiche with AFP
