Once again Schenker is rumoured to be up for sale. At the end of last week, a press report from the news agency Reuters asserted that “the German government has agreed in principle with Deutsche Bahn to sell the rail operator’s Schenker logistics business”. The report did not state what its sources were for these statements although Reuters seemed to imply that they were within the German government.
The report continued, stating “the supervisory board of state-owned Deutsche Bahn will approve the sale as soon as possible, potentially this year”.
Reports of a sale of Schenker have been appearing fairly regularly over the past ten years. The government of Angela Merkel toyed with the idea the privatisation of Deutsche Bahn including the sale of Schenker, but backed away. Various politicians since have considered the issue in the context of Deutsche Bahn’s high level of debt and continuing need for capital investment but the argument appeared to have been lost, with the then finance minister and now the Chancellor Olaf Scholz, committing to continued investment.
What might have changed is the economic environment. With Federal Government finances deteriorating, Germany needs the money.
The question of who will buy the company if it is sold is uncertain, not least as it is unclear if the German Federal Government would wish to retain ownership of a proportion of the equity. If it does, a floatation of Schenker onto the Frankfurt stock market is quite possible. If the Federal Government looks to sell the whole company, there will be a number of both trade-buyers and financial companies who would interested. However, there would also be political hurdles that any purchaser would need to clear, placed there by the trade unions and their friends in the Social Democrat party.
The issue of price is also less than straightforward. From the meagre data that Deutsche Bahn has given about Schenker’s business recently, it seems that the forwarding business is the leading performer. This is not surprising bearing in mind logistics market conditions over the past two years. However, those market conditions are changing and this may have implications for the value of Schenker.
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Source: Transport Intelligence, 13th September 2022
Author: Thomas Cullen