Although DSV’s $16 billion DB Schenker acquisition still had some doubters among German unions that enough jobs will be maintained in the deal’s aftermath, Deutsche Bahn’s supervisory board approved its sale of the freight forwarder Wednesday morning.
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As part of the deal, Denmark-based DSV plans on investing $1 billion euros ($1.1 billion) into Schenker to promote the company’s growth.
Germany’s federal government also approved the deal, which is expected to be completed in 2025 after regulatory approvals.
One of Germany’s most powerful railroad unions, Eisenbahn- und Verkehrsgewerkschaft (EVG), or the Railway and Transport Union, had hoped it could influence the board to vote down the deal. EVG is one of the country’s multiple labor organizations that had a bone to pick with the logistics takeover.
“After 153 years, DB Schenker is to disappear from the [German] market,” Martin Burkert, the chairman of the EVG, told German publication Frankfurter Allgemeine Zeitung (FAZ) ahead of the vote. Burkert, also the deputy chair of the Deutsche Bahn supervisory board that tallied the vote, argued that the sale would do damage to Germany as a place of business. “Politicians and the management board are portraying the sale of our crown jewels as a strategy.”
Richard Lutz, CEO of Deutsche Bahn, said proceeds from the sale will significantly reduce DB’s $30 billion debt. The union had argued that it is uncertain whether the state-owned railway would use the sale to pay it off.
Eight EVG members are on DB’s 20-member supervisory board that voted on the transaction, including Burkert. Joining Burkert are nine employee representatives, as well as 10 shareholder representatives, including chairman Werner Gatzer. The shareholder representatives include two of Germany’s secretaries of state and three members of the country’s parliament.
“The sale of DB Schenker marks an important milestone for DB in its efforts to fully focus on restructuring the rail infrastructure in Germany and providing climate-friendly passenger and freight transport operations in Germany and Europe,” said Gatzer in a statement.
EVG planned to gain support from another rail union, Gewerkschaft Deutscher Lokomotivführer (GDL), the Union of German Train Drivers, who had one representative on the board.
The push followed that of the country’s leading trade union, Ver.di . In August, the union warned Deutsche Bahn against selling Schenker to DSV, arguing that the takeover would cost Schenker 5,300 of its 15,000 jobs in Germany. DSV countered by saying no job cuts would take place in the country for two years after the deal’s closure.
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DSV CEO Jens Lund had said any job losses would likely be from natural churn and staff turnover when the companies integrate.
In the approval announcement, DSV said it has “made a clear commitment to German co-determination and to existing collective and company agreements.”
Ver.di had preferred DB Schenker’s other bidder , a private equity consortium led by CVC Capital Partners. The fund had submitted newer bids after the Aug. 22 offer deadline, but Deutsche Bahn declined them, referring to their deal as inferior.
“DSV submitted the clearly best binding offer at every point in the process up to the signing of the purchase contract,” Deutsche Bahn said in a statement. The German rail company said the CVC offers were “improved in marginal areas” from the prior offer, but “always inferior to DSV’s.”
Deutsche Bahn had wanted to sell the Schenker unit since December 2023 as the firm focused on its railroad roots. Schenker is an enticing sell, largely since it is the best-performing division under the DB banner and was able to generate such a strong bid. In the first half of 2024, DB Schenker generated operating profit of $582 million on revenues of $10.5 billion.
As it planned for a future without Schenker, Deutsche Bahn outlined a three-year turnaround program for its railroad business last month.
The program plans to cut the number of infrastructure-related delays by 20 percent, and return on-time rates in long distance transport to a range of 75 percent to 80 percent by 2027. DB intends to boost operating profit in its core business to 2 billion euros ($2.2 billion) in that period.
Burkert criticized DB’s management board on the day of the turnaround announcement, particularly for lack of clarity into cutting staff by 2027. The company says layoffs not planned, but that the company will focus on reducing administrative, sales and indirect operational staff via turnover and voluntary phased retirement.
“We are missing clear statements on the planned job cuts,” said Burkert. “It is clear to us: There must be no cuts in personnel essential to operations. There are already too few colleagues to keep operations running under the difficult conditions.”
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