It is possible that Germany based Deutsche Bahn is gearing up to sell logistics giant DB Schenker, and buyers are pulling up their socks to grab the opportunity. As per sources, the company is valued at USD 17 billion – 23 billion and this value could be further increased if the revenues for 2021 are taken into account. The potential sale is considered a result of the change of government in Germany, along with the changes in the freight forwarding landscape.
With Germany’s new traffic light coalition government, the political situation has clearly shifted in the direction of a Schenker sale. The Greens have been drumming for a pure rail company and thus a spin-off of the global logistics subsidiary for some time. And the Liberals, as a private-sector-oriented party, will also appreciate an end to state influence on the company.”~ Deutsche Verkehrs-Zeitung
DB Schenker is the 4th largest sea freight forwarder by volume, preceded by DSV, Kuehne+Nagel and DHL. However, the gap between the top 3 players and the next tier is widening as the top 3 continue to grow as a result of customer preference towards large players. Top tier companies are increasing their efforts towards increasing logistics capabilities and acquisitions. Additionally, they are integrating themselves further into air cargo segment.
“They have also improved digital capabilities and have changed contract structures for freight forwarders … In light of the recent ocean carriers’ moves, we believe the freight forwarders’ need to consolidate is stronger than ever.” said a senior forwarder.
In times when Deutsche Bahn is struggling with revenues, DB Schenker has proved to be its forerunner, which when sold, will allow its parent company to ‘manoeuvre more easily in an increasingly consolidated market.’
The interested buyers for the logistics company include a collaboration of private equity firms CVC Capital Partners and The Carlyle Group and Bain Capital with Advent International. Along with these PE firms, industry buyers like Maersk and DSV are also in the race. However, if sources are to be believed, an acquisition by either of these buyers won’t go down well with the German government as it would result in the company being broken up. On the other hand, if acquired by DSV or Maersk, there is an apparent pitfall of job losses and immense harm to the forwarding company’s brand. But it is implicit that DB will want to maximize its forwarder’s value.