Denmark’s DSV wins 14 billion-euro race for Deutsche Bahn’s Schenker, sources say

Danish logistics giant DSV has won a long-running, multi-round competition to buy DB Schenker, the rail logistics arm of Germany's national railway Deutsche Bahn, Reuters quoted Deutsche Bahn and German government sources as saying.

Preliminary contracts for the deal, valued at around 14 billion euros ($15.43 billion), are expected to be signed in the coming days. The deal must be approved by DB's supervisory board, which is made up mainly of government, parliament and union representatives. Deutsche Bahn's board will hold an extraordinary meeting in the coming days to approve the deal. While union representatives on the board are opposed to the DSV takeover as they expect it to lead to more job losses, the sources said. However, the Danish logistics giant DSV's bid was higher than that of another rival CVC, and the government, as the owner of DB Schenker, gave DSV the most important vote, which ultimately decided the bidding of the century that has a bearing on the global logistics landscape.

DB Schenker has more than 70,000 employees in 1,850 locations worldwide, of which around 15,000 are in Germany. DSV's acquisition of DB Schenker would be the highest bid by a Danish company to date. According to brokerage Sydbank, this will allow DSV to overtake Switzerland's Kuehne + Nagel to break new ground in terms of volume and revenue and become the world's largest freight forwarder.

Deutsche Bahn is selling its most profitable division, DB Schenker, to fund investment in its crisis-hit core domestic passenger business and help bring down the rail company's 30 billion euro debt. In recent years, DSV has expanded significantly through several acquisitions, including UTi in the United States, Panalpina in Switzerland and Kuwaiti Global Integrated Logistics (GIL), which is primarily focused on strengthening the company's air and maritime operations.

Data show that at present DSV and DB Schenker are ranked third and fourth in the world respectively. DSV's annual revenue is about 22.316 billion US dollars, with a cargo volume of 2.519 million TEU by sea and 1.305 million tons by air. DB Schenker, on the other hand, has annual revenues of $21.116 billion, with sea freight of 1.783 million TEU and air freight of 1.148 million tons.

When DSV and DB Schenker merge the two giants, it will create a new hegemon with annual revenue of 43.4 billion US dollars, sea cargo of 43,02295TEU, air cargo of 2,453,827 tons, surpassing Kuehne & Nagel to become the world's largest freight forwarder.

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