DSV, CVC Seen as Lead Contenders for Schenker After Maersk Drops

01/07/2024

A worker packs a customer's order inside a DB Schenker logistics hub near Gothenburg, Sweden, on Wednesday, March 20, 2024. Deutsche Bahn AG started the sales process for its DB Schenker logistics unit, which could be valued at as much as €20 billion ($21.3 billion), to a financial investor or rival logistics company.

(Bloomberg) -- Danish transport group DSV A/S and CVC Capital Partners Plc are seen as the leading contenders for Deutsche Bahn AG’s logistics unit DB Schenker after AP Moller-Maersk A/S dropped out of the running, according to people familiar with the matter.

Binding bids are expected to be submitted in August, the people said, asking not to be identified because the information is private. CVC has offered to let the German government or related fund keep around a 20% stake in the unit and benefit from any future upside, according to the people.

Rival bidder DSV could link DB Schenker into its freight forwarding technology system, seen as one of Europe’s largest platforms, the people said. The Danish company has made a number of acquisitions in recent years, often raising the group’s combined profit margins once a takeover is digested.

A third suitor — Saudi shipping company Bahri — put in one of the highest offers in the most recent round of bidding, the people said, though it’s unclear if it will make a final proposal by the upcoming deadline.

Some non-binding bids came in above €15 billion, Bloomberg News reported earlier. CVC, which has teamed up with GIC Pte and the Abu Dhabi Investment Authority, placed a bid of around €14 billion, people with knowledge of the matter have said.

Maersk announced earlier Monday it withdrew from the bidding, confirming an earlier Bloomberg News report. Bernstein said in a research note that Maersk’s departure from the process strengthens DSV’s hand in a potential deal, saying there’s now a roughly 85% of success for the Danish company.

The CVC consortium lacks potential operational synergies and is unlikely to bid an irrational price, according to Bernstein analysts Alex Irving and Tobias Fromme.

“From a fundamental perspective, this really should be a deal for DSV,” they wrote in the research note Monday. “In our view, the only real impediment to a deal is Saudi Arabia’s Bahri making an outrageous offer.”

Representatives for DSV and the CVC consortium declined to comment, while a spokesperson for Bahri didn’t immediately respond to queries.

“We are currently in intensive discussions with the various parties interested in DB Schenker,” a spokeswoman for Deutsche Bahn said in an emailed statement Monday, declining to comment further.

Deutsche Bahn announced in December it will explore a sale of DB Schenker. A deal would help the German state-owned firm slash debt and modernize its domestic railroad operations, a key government priority.

A potential divestment of DB Schenker could rank as one of the biggest European transactions this year and comes at a time large corporations on the continent are looking to streamline their operations. Sanofi SA has called for initial bids for its $20 billion consumer health division while also studying a possible listing of the unit, Bloomberg News reported in June.

--With assistance from Matthew Martin and Sara Sjolin.

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