Deutsche Bahn to explore sale of $21 billion logistics unit

Deutsche Bahn AG will explore selling its DB Schenker logistics unit in a deal that could reap around €20 billion ($21.4 billion) for Germany’s heavily indebted state-owned rail operator.

The proceeds from the sale “are to remain entirely within the DB Group and contribute, among other things, to the significant debt reduction of the company,” Deutsche Bahn said Thursday in an emailed statement. The company’s supervisory board earlier approved the plan to look into selling Schenker at a meeting in Berlin.

“The start of a concrete sales process depends on the overall environment and has not yet been scheduled,” the company added. “A sale should only take place if it is financially advantageous compared to DB Schenker remaining in the DB Group.”

While global logistics providers benefited from surging freight costs in the wake of the Covid-19 pandemic, rates have come down in recent months as the global economy slows. Schenker, which transports goods by land, air and ocean, has helped Deutsche Bahn return to profitability this year.

Deutsche Bahn has a debt load of about €30 billion and plans to continue investing heavily in modernizing infrastructure. Bloomberg reported in February that it had been working with a consultant and legal advisers to ready the business for a possible sale.

Carlyle Group Inc. and CVC Capital Partners have held talks to make a joint bid, while Advent International and Bain Capital as well as Blackstone Inc. may also seek to team up, people familiar with the planning said at the time.

However, buyout firms may struggle to raise financing for such a big deal in the current environment. An initial public offering has also been an option, the people said.

Schenker could also attract rival logistics companies. Danish transport giant DSV A/S would be interested in buying the business if the German state decides to sell, Chief Financial Officer Jens Lund said last year. Other potential suitors in that space could include Germany’s Deutsche Post AG and Kuehne & Nagel International AG of Switzerland.

Schenker employs some 76,000 people and generated around €1.2 billion in adjusted earnings before interest and tax in the first half. That was the best half-year result in the company’s 150-year history, according to Deutsche Bahn.