€14.3bn sale of DB Schenker set to help struggling German railway

Danish logistics company DSV has struck a deal to buy DB Schenker, the logistics subsidiary of Germany's rail operator Deutsche Bahn, for €14.3 billion ($15.8 billion), the two companies said on Friday.

While state-owned Deutsche Bahn faces financial troubles, DB Schenker - which has around 72,700 employees in more than 130 countries - has performed well when it comes to its bottom line.

Deutsche Bahn said on Friday that it intends to use the proceeds from the sale to cut its debt and improve the "financial sustainability" of the firm.

The sale to DSV is due to be concluded during the course of the coming year.

Workers at DB Schenker have demonstrated amid concern about losing their jobs as part of a takeover deal.

The deal with DSV is said to include a commitment to protect jobs until 2027.

The agreement still requires the approval of Deutsche Bahn's supervisory board and the government.

German Transport Minister Volker Wissing welcomed the takeover deal, saying the goal was for Deutsche Bahn to focus on its core business – rail transport in Germany. "The sale of Schenker is an important step in this direction."

Schenker's business activities have no connection to the railway's core business, Wissing said, adding that Deutsche Bahn's high level of debt and lack of investment freedom also made Schenker less competitive.

"A company like Schenker must position itself internationally to be able to grow. The railway, on the other hand, must focus more on its core tasks. There is still enough to be done here," he said.

Deutsche Bahn is set to focus on public welfare-oriented rail infrastructure and environmentally friendly passenger and freight transport in Germany and Europe, boss Richard Lutz said. "At the same time, the reduction of debt makes a substantial contribution to the financial sustainability of the company," he added.

Deutsche Bahn will work on structural rehabilitation of the infrastructure, railway operations and economic efficiency over the next three years, Lutz said.

As Schenker's new owner, DSV plans to invest around €1 billion in Germany in the next three to five years, boss Jens H. Lund said. "We have a clear plan on how we want to become the world's leading transport and logistics company together."

Together, DSV and Schenker will have revenues totalling 293 billion Danish kroner ($43 billion) and employ around 147,000 people in more than 90 countries, according to DSV.