The Danish logistics group, DSV, appears to have won the race to acquire DB Schenker. This was confirmed to news agencies Reuters and Bloomberg on Wednesday evening (11SEP24), by leading members of the Berlin government and high ranking Schenker executives. The second remaining bidder, financial investor CVC, would therefore be out of the game.
The die seems to have been cast regarding the future fate of Schenker. According to Berlin government sources, DSV offering 14 billion euros, has been chosen as preferred bidder for the 100% takeover of the Deutsche Bahn subsidiary. Should the deal be inked as expected, DSV would become the world’s largest logistics provider for air and ocean freight and, once the annual results are consolidated, would surpass Kuehne+Nagel and DHL. By integrating Schenker, DSV would also be the undisputed number one in European road transportation.
Schenker’s name will soon be history
As the news agencies state, the signing of a preliminary agreement for the takeover of Schenker by the Danish group is imminent. However, the sale is still subject to approval by the supervisory bodies. This is to take place in a special meeting.
Following the takeover, Schenker’s company name would vanish, after 152 years in existence. In contrast, bidder CVC assured that it would keep the Schenker brand. It also offered the German state or Deutsche Bahn to retain 24.9% in Schenker. In the event of an IPO at a later date, this part could then be sold with a billion-euro increase in value, argued the capital investor.
Silverware can only be sold once
CVC also sweetened its offer assuring to secure transports in the event of a NATO alliance or defense case. In addition, the equity firm revealed that Deutsche Bahn had identified annual investments in Schenker totaling one billion euros. This amount would be topped by CVC, management confirmed. State-owned rail operator, Deutsche Bahn wants to sell Schenker in order to concentrate on its crisis-ridden core business in Germany and reduce its debt burden of 30+ billion euros. However, Schenker is the only division within DB earning money. “You can only sell silverware once,” commented a source.
Union opposes the deal
Trade union Verdi, responsible for Schenker, is fiercely opposing the upcoming DSV deal. Verdi fears that many jobs would be axed should DSV take command. In its statement, the organization appeals to the self-interests of Berlin’s policymakers. “In the increasingly challenging economic and geopolitical situation, Germany cannot afford to lose another domestic and strategically important industrial champion,” the Union’s note reads.
DSV counters this, saying that no more than 1,000 jobs would be affected in the short term and that, in the medium term, even more people will work at the then affiliated organizations, compared to today. Currently, the Danish logistics giant employs almost 15,000 people in Germany and over 70,000, worldwide. Schenker is similarly large, with 72,700 employees worldwide, of whom 5,300 work in Germany.
Panalpina is a cautionary example
Market experts fear that there will be radical job cuts despite DSV’s contrary assertion. They point to the Panalpina experience, where thousands of Panalpina employees lost their jobs once DSV took over the Swiss forwarding agent on 01APR2019. “Our company was completely gutted in a short period of time,” a former Panalpina executive told CargoForwarder Global. This happened despite an integration committee with equal DSV and Panalpina representation having been set up to ensure the fair treatment of all employees. In retrospect, its setting up proved to be a sop to Panalpina shareholders to facilitate the takeover of the Swiss logistics company by DSV without much fanfare.
Deaf ears
Considering this experience, trade union Verdi expects considerable job losses once DSV has fully integrated Schenker. That is why the union and presumably most Schenker employees prefer a CVC takeover. “The capital investor does not operate a logistics business, so no imminent job losses are to be expected here,” reads a statement from the works council. However, such concerns are apparently falling on deaf ears within the Berlin government. In contrast, the opposing Christian Democrats are against selling Schenker. But they don’t have the say in Berlin right now.
