Saudi Arabian state-owned Investor Bahri has exited the Schenker sales process. It is the second preferred bidder stepping out of the Schenker race, following the withdrawal of Danish shipping company Moeller Maersk weeks ago. The remaining two bidders are the Danish shipping giant DSV and a consortium consisting of CVC Capital Partners, the Carlyle Group, and the Abu Dhabi Investment Authority. When the German government announced their intention to sell Deutsche Bahn’s logistics unit, more than 20 potential bidders had expressed their interest in Schenker.
Schenker parent, state-owned Deutsche Bahn had expected revenues of up to 15 billion euros from the sale of its logistics unit, eventually even more. With Bahri’s withdrawal, however, these hopes seem to vanish into thin air. After the financially strong Saudi investor pulled out, following Moeller Maersk’s step weeks ago, the remaining two bidders will probably reconsider their Schenker offers. After all, less competitors means that the remaining investors have more leeway in price negotiations.
Schenker is Deutsche Bahn’s cash cow
The German Minister of Transport, Volker Wissing of the Liberal Party (FDP), had high hopes of a windfall when he announced plans to sell Schenker, an intention backed by its coalition partner, the Green party at the time. In contrast, the Social Democrats, which head the coalition, remained reserved.
The proceeds were to be used to pay off Deutsche Bahn liabilities of €7 billion and investing the difference of 7 or 8 billion euros for modernizing the dilapidated railway system, including driving Deutsche Bahn’s digitalization roadmap ahead.
Since DEC 24, the tender process is underway. Schenker has long been the most important source for annual profits channeled into the (empty) coffers of parent Deutsche Bahn. In 2022, this amounted to 1.8 billion euros, partly due to the catch-up effect of the pandemic, followed by one billion euros in fiscal 2023, which was characterized by economic normalization.
At DB, reliability and punctuality are foreign words
In 2002, the rail group acquired Schenker for around 2.5 billion euros and hoped for synergies with its rail division. However, these hardly materialized, partly due to a lack of political support that kept favoring the automotive industry instead of rail transports. Currently, Schenker has 76,000 employees standing on its global payroll. The company runs stations in around 130 countries.
The deplorable state of Deutsche Bahn, which was literally cut to the bone during Chancellor Merkel’s term in office, was recently experienced by thousands of visitors to the European Soccer Championships held in Germany. Many of them were unable to get to the arenas on time due to technical problems or other hiccups. But not only attendees were hit but players as well like the Dutch squad that was forced to fly from Braunschweig to 272 km distant Dortmund, to arrive in time for their soccer match against England. The train they had booked for the trip was faulty and no replacement was available at short notice.
According to earlier announcements by Deutsche Bahn, the outcome of the Schenker sales process was expected for the end of August. However, whether this date is still valid is uncertain. With reference to the confidentiality of the entire due diligence phase, the Deutsche Bahn Group is not making any statements on the status of the tender or whether the withdrawal of bidder Bahri would affect their divestment plans.
Wissing under fire
Market experts do not exclude the tender to be called off altogether. They indicate increasing concerns within the Berlin government backed by unionists opposing the Schenker divestment. Doubts are fueled by dubious decisions repeatedly made by Transport Minister Wissing in support of traditional car manufacturers clinging to fossil fuel, thwarting e-mobility.
Now Wissing could be embroiled in a scandal. According to a report aired by nationwide TV station ZDF, Wissing and his state secretary Oliver Luksic (both FDP) are said to have been available for “exclusive VIP meetings” with industry lobbyists in return for money. Although both politicians denied the allegations, the documents presented by the TV station are clear. Not only the opposing Christian Democrats are demanding clarification, but also the Greens, who are part of the government.
Provided Mr. Wissing were to resign, this will not be without consequences for the DB Schenker tender process.