(Bloomberg) -- DSV A/S agreed to buy a Deutsche Bahn AG unit in a €14.3 billion ($15.9 billion) deal that will turn the Danish company into one of the world’s largest logistics businesses.
DSV signed an agreement to acquire DB Schenker in an all-cash transaction, it said Friday. The deal, which confirms an earlier Bloomberg News report, has an equity value of €11 billion. It’s one of the largest sales of a state-owned business in Germany in years.
DSV, founded by 10 Danish truckers in the 1970s, grew through acquisitions in the fragmented transport industry, including buying targets that were larger than itself. Taking over Schenker, which has about the same number of staff as DSV, will be the first big challenge for Chief Executive Officer Jens H. Lund. He took the top job this year from Jens Bjorn Andersen, under whom the share price jumped more than 10-fold over a 15-year tenure.
DSV shares rose as much as 4.3% early Friday in Copenhagen, after jumping 10% Thursday following the Bloomberg report. The stock was up 1% at 12:27 p.m. in Denmark.
DSV said it will finance the purchase over the next 12 months through a share sale of as much as €5 billion and debt financing. The company aims to issue new stock as quickly as possible, Lund said on a media call Friday, hinting that it could be done within a month.
Based west of Copenhagen, DSV has built a reputation as a skilled integrator of its acquisitions, which include Panalpina Welttransport Holding AG in 2019 and UTi Worldwide Inc. three years earlier. In late 2022, DSV finished the integration of its most recent large takeover, the $4.1 billion purchase of Kuwaiti logistics company GIL, and said in July it was ready to make a new one.
DB Schenker will represent a challenge as the takeover target has about 73,000 employees — roughly the same number as DSV. Lund has often pointed out that DSV, back in 2000, bought a company that was four times its size.
The Danish company plans to cut between 1,600 and 1,900 jobs in Germany as part of the integration, a DSV spokesperson said by phone. That includes 800 to 900 jobs that DB Schenker was cutting under its own restructuring program.
“Normally when we integrate companies, we manage to get the efficiency of these companies up to our level,” Lund said in an interview with Bloomberg TV’s Francine Lacqua on Friday. “This means that, of course, at the end of the day, there will be basically job cuts.”
Revenue may “dip a little bit” in the short term, Lund said, but he expects DSV will win market share in the long run. The integration will take two to three years, he added.
The transaction will create the world’s biggest freight forwarder, a business that books space on trucks, ships and plans and helps manage the supply lines of consumer companies.
The freight-forwarding industry benefited from the post-pandemic consumer boom, posting record profits, only to face a sharp drop in 2023 once supply lines and consumption normalized. Freight rates have jumped again again after the Red Sea conflict disrupted supply lines late last year.
State-owned Deutsche Bahn, which is struggling with poor infrastructure in its rail network, said Friday that it will use the proceeds from the Schenker sale to cut its debt “significantly.”
One of the key themes in the talks was the preservation of jobs in Germany. Verdi, the country’s most powerful labor union, last month made the unusual move of backing CVC’s bid, saying the private equity firm might fire fewer people after a takeover. DSV, in response, made additional job and investment pledges, according to Bloomberg News reports.
DSV said Friday it has “entered social undertakings” in relation to the German employees, which will apply for two years after closing. It pledged to invest €1 billion over the next five years in Germany, “which will contribute to ensuring long-term growth and job creation.”
The transaction is subject to approval by Deutsche Bahn’s supervisory board and Germany’s transport ministry, as well as customary regulatory approvals.
(Updates with job cuts from eighth paragraph; CEO comment from ninth)
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