“We are in the process of gathering all the necessary facts for a possible sales process. As soon as we have these, we will examine all options, ”explained Schenker boss Jochen Thewes and Deutsche Bahn supervisory board chairman Levin Holle on Monday in an employee letter that is available to the Handelsblatt. “There is no set date for the end of the review process and the start of a potential sale process. We prepare everything with the necessary care and without pressure.”
Potential buyers have been dealing intensively with Schenker since the beginning of 2022. According to financial circles, some now doubt whether Deutsche Bahn still wants to sell at all. “It gives the impression that Deutsche Bahn has realized that it missed the right point in time and is now preferring to let it be,” says one potential bidder. The market environment is unfavorable and bidders are rare, which puts pressure on the possible selling price. When asked, Deutsche Bahn itself did not want to comment further on the Schenker sale.
Schenker: The profit falls – and with it the selling price
Last year, Schenker posted an operating profit of 1.8 billion euros. According to financial circles, a slump to around one billion is expected this year. As a rule, however, the company valuation and thus the expected sales proceeds also decrease with the profit prospects.
From the environment of the company it is said that the sales process should start after the summer break at the earliest. The consulting company AT Kearney was hired to create a forecast for the development of the logistics market, which would ultimately also be used to guide the price expectations. AT Kearney has not yet commented on this when asked by the Handelsblatt.
In the employee letter, Thewes and Holle write about the further procedure: “On the one hand, we are interested in reaching a result as quickly as possible. On the other hand, DB must act carefully and take into account the current overall situation, especially on the financial markets, in order to achieve the best possible result for Schenker as well.” DB must organize a Europe-wide, non-discriminatory bidding process in which the sale proceeds alone decide on the bid.
Difficulties with all potential prospects
Potentially interested private equity companies are currently struggling to obtain bank loans for large acquisitions. Schenker is valued at up to 15 billion euros. According to financial circles, the financial investors Carlyle and CVC have already joined forces to be able to handle a deal of this magnitude. Advent and Bain could also team up, and Blackstone is also still looking for a partner, it said. But her work is currently on hold. “The financing markets are closed, private equity is currently unable to act,” said a person familiar with the transaction.
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Some competitors are also interested in Schenker, above all the Danish DSV. However, she is considered unpopular with Schenker – and with the federal government, the owner of Deutsche Bahn. They fear massive job cuts and the loss of Schenker’s independence in the event of a takeover by DSV.
Deutsche Post is also examining a possible takeover, but is only moderately interested in view of the large overlap in business. Kuehne + Nagel’s major shareholder, Klaus-Michael Kuehne, declared in the spring that buying Schenker was not an option for his company. The French CMA CGM currently has enough to do with the integration of the recently acquired Bolloré Logistics and is also withdrawing as a buyer.
>> Read also: Deutsche Bahn missed the right time for a Schenker sale
In such an environment, a quick start to an auction is considered less than opportune. “To be clear: DB Schenker will only be sold if two conditions are met: First, it is financially advantageous for DB Group. Second, it opens up additional growth opportunities for DB Schenker,” write Thewes and Holle.
Arriva sale is on the home straight
With the planned sale of its British regional transport subsidiary Arriva, however, Deutsche Bahn is already much further along. According to financial investors, three interested parties have submitted non-binding offers: the English competitor First Group, the French Keolis and the financial investor I Squared. Bidders expect to submit their final bids in the next few weeks.
The First Group is considered to be well positioned in the race due to its good knowledge of the local competitor, and also has plenty of money to invest from the sale of US activities. However, it only bids for non-British activities that generate an operating profit of around 100 million euros come to avoid problems with competition watchdogs. The railway would then have to laboriously sell the small remaining business separately.
Arriva could be valued at around 1.2 billion euros when sold. The share of the British business will be up to 200 million euros estimated, said a person familiar with the process. Other observers of the transaction are assuming a valuation of 1.5 billion or more. The Arriva bidders declined to comment or were initially unavailable.
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