DSV Agrees to Buy Deutsche Bahn's Schenker Logistics Arm For More Than $12 Billion — Update

By Dominic Chopping

Danish logistics company DSV said it would buy Deutsche Bahn's logistics arm for more than $12 billion, winning a monthslong sales process that saw sovereign wealth funds, private equity firms and shipping giant Maersk all weighing bids.

The Wall Street Journal reported Thursday that a consortium led by CVC and with Abu Dhabi Investment Authority, Qatar Investment Authority and Singapore's GIC as partners had made a rival offer.

"The commercial and operational fit between all three divisions of DSV and Schenker will provide strong opportunities to develop the combined business in the coming years, which in turn will contribute to growth, job creation and strong financial returns," DSV said.

The Danish company will pay 11 billion euros ($12.18 billion) in cash, financed through a combination of equity financing of around 4 billion to 5 billion euros and debt while its current 1.5 billion Danish kroner ($222.6 million) share buyback will be stopped immediately.

The deal values Schenker at 14.3 billion euros including debt.

Together, DSV and Schenker will have a combined revenue of around $43.5 billion and a joint workforce of around 147,000 employees across more than 90 countries, making it the world's largest freight-forwarder, according to analysts at Sydbank.

The combination of the two businesses will create economies of scale while offering an enhanced global network and digitalized products and service, DSV said.

The market should take the news positively given it has been a close race and most recently a range of 14 billion-16 billion euros had been reported, JPMorgan said in a note to clients.

"We see material upside for the shares ahead, supporting a multi-year growth story, given the significant opportunity for synergies but also likely transformational for the group overall given market share will go to 7% from 4% previously," the bank said.

Germany's state-owned rail-and-logistics operator Deutsche Bahn launched a sale process for Schenker in December to focus on its core business of rail transport and infrastructure as well as cutting its debt pile of more than 30 billion euros.

"We are focusing our business on rail infrastructure in Germany that serves the common good," Deutsche Bahn Chief Executive Richard Lutz said Friday. "At the same time, reducing debt will make a substantial contribution to the group's financial sustainability."

Write to Dominic Chopping at dominic.chopping@wsj.com

(END) Dow Jones Newswires

September 13, 2024 03:21 ET (07:21 GMT)

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