German national railway Deutsche Bahn AG and transport and logistics provider DSV of Denmark on Friday said they have signed an agreement for DSV to acquire DB’s logistics subsidiary Schenker for an estimated $15.84 billion.
DB said interest income until completion of the sale could push the value to $16.4 billion.
DSV said in a release that the combined companies will have revenue of $43.5 billion, ranking ahead of current leading global forwarder Kuehne+Nagel of Switzerland, at $28.11 billion. The joint workforce will total around 147,000 employees in more than 90 countries.
Schenker, founded in Vienna in 1872 and acquired by the German State Railway in 1931, will remain headquartered in Germany, where DSV said it plans to invest around $1.1 billion over the next three to five years. That part of the agreement is aimed at assuaging concerns by German labor unions that a successful DSV bid could eliminate as many as 5,300 jobs.
“DB Schenker is one of the most powerful and innovative teams in transportation and logistics with more than 150 years of experience,” said Jochen Thewes, chief executive of Schenker, in a release. “The recent years have been the most successful in our company’s history and we have proven that DB Schenker is fit for the future. We are excited about the future prospects of the combined business. Together with DSV, our goal is to transform the industry and build a truly global market leader with joint European roots for the best of our employees and our customers.”
The sale is expected to be completed by 2025.
The combined networks will have annual volume of 4.3 million twenty-foot equivalent units, 2.64 million tons of airfreight and 1.88 million square feet of warehouse space in more than 60 countries.
“This is a transformative event in DSV’s history, and we are very excited to join forces with Schenker,” said Jens H. Lund, chief executive of DSV, in the release. “With the acquisition we bring together two strong companies, creating a world-leading transport and logistics powerhouse that will benefit our employees, customers and shareholders.”
Schenker is the latest acquisition by DSV. Others have included UTi Worldwide of the U.S., Switzerland-based Panalpina and Kuwaiti Global Integrated Logistics. The Danish company won out over a bid by a private investor consortium led by CVC Capital Partners of New York.
The sale comes as Deutsche Bahn refocuses investment on its core domestic passenger rail business and chips away at its $33.25 billion debt.
“The sale of DB Schenker to DSV marks the largest transaction in DB’s history and provides our logistics subsidiary with clear growth prospects,” said Richard Lutz, CEO of Deutsche Bahn, also in a release. “It has been important for us to find a strong partner for Schenker and a long-term home for the employees of the company.”