News / DSV offering €1bn investment and jobs guarantee to land Schenker, claim

04/09/2024

DSV has declined to comment on a media report that it has ‘sweetened’ its takeover bid for DB Schenker by promising a €1bn investment and providing a guarantee that the workforce will remain intact for two years after the sale.

A consortium led by private equity firm CVC Capital Partners is the only other bidder for the Deutsche Bahn subsidiary, which is principally being sold to finance much-needed upgrades to the German state railway network, and also to reduce its high level of debt.

According to Reuters,quoting sources close to the negotiations, DSV wants to invest around €1bn in DB Schenker within three to five years to make the business more profitable. Previous bidders have pulled out over concerns that its IT system also needs significant investment, according to market sources.

In addition, no individual parts of DB Schenker would be sold on after acquisition, added Reuters.

And sources added that DSV had made assurances that employment guarantees would be in place for two years after the expected completion of the sale in 2025.

A spokesperson for DSV told The Loadstar: “We don’t comment on rumours in the market, or M&A in general.”

DSV and the CVC-led consortium are understood to have each submitted binding bids of approximately €14bn for DB Schenke, but Bloomberg has reported that the buyout specialist has also tabled an offer of as much as €16bn that would see the German government re-investing for around a 25% stake in DB Schenker.

Preserving employment at DB Schenker – more than 76,000 staff in more than 130 countries – has always been a major consideration in the sale process. German newspaper Der Spiegel reported that labour union Ver.di has been campaigning heavily in favour of the CVC bid. In an internal document, it calculates that 5,300 jobs could be lost in the event of a DSV takeover.

“The threat of job losses in the event of a takeover of DSV is immense,” says the document, a copy of which was sent to Deutsche Bahn’s supervisory board.

“As CVC does not operate a logistics business, no such imminent job losses are to be expected here,” it adds.

However, CVC does own Denmark’s fast-growing Scan Global Logistics – a direct competitor of DB Schenker.

Contacted by The Loadstar, no one at CVC was available to comment on whether, if successful, there were plans for a merger between SGL and Schenker.

Earlier this year, Tobias Fromme, senior research associate at business consultant Bernstein, told The Loadstar DSV was the “the logical buyer” for DB Schenker, as it had “the highest synergy potential and the lowest execution risk”, and that the company would be “worth the most to [DSV], and they should be able to pay the most for it”.

However, he also underlined the ‘jobs factor’, pointing out that German politicians may resist a sale to DSV, as it “typically sheds 45% of the increase in headcount in the 18 months post-deal.”