Deutsche Bahn AG is open to selling its DB Schenker logistics unit, which could be valued at as much as €20 billion ($21.3 billion), to a financial or strategic investor, the company wrote in a management letter seen by Bloomberg. 

The German railroad operator is weighing up whether to sell a stake or make a full divestment, according to the letter written by Schenker’s chief executive officer, Jochen Thewes, and Deutsche Bahn’s chief financial officer Levin Holle. “Everything is on the table,” the pair wrote in the joint letter. 

A final decision to sell the Schenker unit will only be made if it is financially beneficial to the Deutsche Bahn Group and also enables “additional growth opportunities” for Schenker, according to the letter. The company declined to comment. 

Deutsche Bahn said in December 2022 it will explore a sale of DB Schenker. It may also divest its Arriva transport business, Bloomberg News previously reported. Asset sales would help the German state-owned firm slash debt, and modernize its domestic railroad operations. 

The state-owned company, whose network of inter-city fast trains frequently struggles with delays, on May 13 only just avoided what would have been the third labor strike this year. 

Advisory Roles

Deutsche Bahn selected banks, including Goldman Sachs Group Inc. and Morgan Stanley to advise on the potential sale unit, Bloomberg reported in March 2023. Deutsche Bank AG also said at the time it expects to get an advisory role.

There is time set for the end of the current review process and moving to a sale, according to the letter. “We prepare everything with the necessary prudence and without pressure,” the CEO and CFO wrote. 

Schenker is likely to attract bids from rival logistics companies. Danish transport giant DSV A/S reiterated in February 2023 that it’s ready for deals and said previously it would be interested in buying the business if the German state decides to sell. Other potential suitors in the industry could include Germany’s Deutsche Post AG and Switzerland’s Kuehne + Nagel International AG.

Carlyle Group Inc. and CVC Capital Partners have held talks about making a joint bid and buyout firms, including Advent International, Bain Capital as well as Blackstone Inc., may also be interested, Bloomberg has previously reported. The ability of private equity firms to make such a big acquisition will also depend on the state of the financing markets.