More rumours have emerged over Deutsche Bahn/Schenker’s plans for expansion by acquisition. Reports in the FT Deutschland, quoting amongst others Hans-Joerg Hager, Managing Director of Schenker AG, claim that Schenker is planning acquisitions in Spain or Portugal, Britain and Italy. These sources state that Deutsche Bahn/Schenker will spend around ?1 billion on these acquisitions.

This is presumably in addition to the sum spent on the acquisition of German logistics company Schnellecke which was also reported on in The Financial Times Deutschland. These statements have yet to be confirmed by DB/Schenker. However such a volume of leaks from the same source would suggest at least some element of truth.

Press reports are suggesting that Deutsche Bahn (DB) is bidding to buy Schnellecke, the German road freight and logistics company. The Financial Times Deutschland stated that sources in both DB and Schnellecke were asserting that the two companies were in discussion over an offer to buy the company for ?200m. Schnellecke has denied that these discussions are taking place, whilst DB is reported to have avoided comment.

Schnellecke is a privately owned company controlled by the Schnellecke family. It operates a large less- than-trailer-load (LTL) road freight business and substantial contract logistics operations. The latter are largely concentrated on automotive business and are strong on value-added activity, including light engineering activities. The growth of Schnellecke has been dominated by Volkswagen, situated as it is in Wolfsburg, VW’s home town. Schnellecke has always declined to discuss its financial figures with Transport Intelligence, however its turnover is estimated to be in excess of ?500m- ?750m. It is one of the largest privately owned LSPs in Germany.

If these rumours are true it is slightly surprising that DB has chosen Schnellecke to bid for, as the overlap with DB’s ‘Schenker’ business is substantial. Schnellecke is obviously strong in LTL transport in Germany and in automotive contract logistics, which also are two key areas for Schenker. Like Schnellecke, Schenker’s largest customer is Volkswagen. Indeed a possible barrier to the deal is the vehicle manufacturer’s discomfort with the merger of two of its largest logistics suppliers.

However that DB is acquisitive is no surprise. During the recent debate over the privatisation of Deutsche Bahn, CEO Hartmut Mehdorn indicated that he wished to continue with its strategy of acquisition that has seen it buy the US based airfreight company Bax Global as well the logistics and forwarding company Schenker.

Deutsche Bahn is also busy realigning its internal management to enable it to digest its acquisitions better. It has just announced the streamlining of its DB Logistics Division. This is now concentrated around five business units, three of which are part of the Schenker brand. These changes illustrate that DB is serious about diversifying its whole logistics business away from reliance on rail related operations and towards a broad portfolio of transport modes and logistics activities. For example it is orientating its ‘Intermodal’ business unit towards serving sea container traffic in and out of the north German

Further to this, FT Deutschland cited a report leaked by a source within the German Ministry of Transport asserting that the part-privatisation of Deutsche Bahn would be delayed by the failure of the German parliament to pass the appropriate bill on time. This could delay the privatisation beyond the suggested date of 2009.

The impact that this could have on DB/Schenker’s apparently aggressive acquisition strategy is unknown, however the company has been quite clear that the money raised by the flotation will be important in supporting the company’s purchase of further logistics assets.

The company has not disclosed the nature of the targets it wishes to buy. However the figure of ?1 billion suggests that the companies will be medium-sized and possibly road transport companies, maybe similar to Schnellecke. Other possible targets could be rail-freight companies in Spain and the UK, although these would be more expensive and/or complex acquisitions. They would also concern the other businesses of DB Logistics, such as Stinnes Intermodal, rather than Schenker.

Source: Transport Intelligence

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