Partial privatization of db subsidiaries: deutsche bahn opens up to investors

Deutsche Bahn wants to partially sell its subsidiaries Arriva and Schenker. A concept is to be ready by the fall.

DB Schenker is the logistics subsidiary of Deutsche Bahn, offering air and sea freight worldwide Photo: dpa

The federally owned Deutsche Bahn AG wants to partially sell its two internationally active subsidiaries Arriva and Schenker in order to raise money for investments. On Wednesday, the supervisory board of Deutsche Bahn instructed the executive board to prepare "a concrete implementation concept for a minority stake by third parties." A final decision should be made in the fall of this year, Deutsche Bahn announced after a special meeting of the board in Berlin.

Deutsche Bahn CEO Rudiger Grube plans to float the two subsidiaries on the stock market between 20, placing up to 45 percent of the shares in each. DB Arriva bundles all regional transport activities outside Germany; the company offers bus or rail services in 14 European countries, including the UK. DB Schenker is the logistics subsidiary of Deutsche Bahn, offering air and sea freight worldwide as well as truck transports throughout Europe.

Deutsche Bahn Supervisory Board Chairman Utz-Hellmuth Felcht justified the planned partial sale as follows: "If we don’t take countermeasures, the Group’s debt will increase significantly by 2020." He added that the third-party equity investment would limit Deutsche Bahn’s debt and create scope for more investments. 90 percent of the Group’s investments up to 2020 would be in the railroads in Germany.

The Supervisory Board also decided on Wednesday to dissolve the previous holding structure. The DB Mobility Logistics subgroup, which was established for the IPO that failed in 2008, will disappear.

For the railroad workers’ union EVG, an IPO of DB is thus "off the table." However, the union supports the partial sale of the two foreign subsidiaries. "DB AG is reducing its involvement abroad and using the proceeds to invest in routes and trains in Germany," said EVG head Alexander Kirchner.

Green Party rail expert Matthias Gastel assessed the plans as the "preliminary endpoint of a years-long expansion course by the rail company." However, he spoke out against partial privatization. "Either Arriva and Schenker should make a stronger contribution to the core business and remain in the group, or in the long term you separate completely from both group subsidiaries," Gastel said.

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