DSV buys DB Schenker for $15.9 billion, creating a logistics giant

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Danish logistics company DSV A/S has agreed to buy DB Schenker, a unit of Deutsche Bahn AG, in a $15.9 billion deal that catapults DSV into one of the world’s largest freight forwarding and supply chain management companies. The all-cash transaction, announced Sept. 13, marks one of the largest sales of a state-owned company in Germany in recent years.

The company said it would fund the purchase over the next 12 months through the sale of up to $5.5 billion in shares and debt financing. The deal, which confirms an earlier Bloomberg News report, has an equity value of nearly $12 billion.

Founded by 10 Danish truck drivers in the 1970s, DSV has grown through a series of acquisitions in the fragmented transport industry, including buying targets larger than itself. The takeover of Schenker, which has about the same number of employees as DSV, will be the first major challenge for CEO Jens H. Lund. He took over the top job this year from Jens Bjorn Andersen, under whose leadership the share price has risen more than 10-fold in 15 years.

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 completed the integration of its last major acquisition, the purchase of Kuwaiti logistics company GIL for $4.1 billion, and has since said it is ready for a new acquisition.

Shares rose on bets that DSV will win the race for DB Schenker. (Bloomberg)

Creating a Global Logistics Powerhouse

DB Schenker will pose a challenge for the DSV team, as the takeover target has around 73,000 employees – roughly the same number as the Danish buyer. Lund has often pointed out that DSV bought DFDS Dan Transport Group in 2000, which at the time was four times larger than DSV.

The transaction will create the world’s largest freight forwarding company — a business that books space on trucks, ships and planes and helps manage supply lines for consumer goods companies.

DSV A/S (North America) is ranked 10th on the Transport Top 100 list of the largest logistics companies in North America. It is ranked 14th on the TT Top 50 list of the largest global freight carriers.

DB Schenker ranks 25th on the TT Top 100 list of the largest logistics companies in North America. Deutsche Bahn ranks 15th on the TT50 list of global freight carriers.

The shipping industry benefited from a post-pandemic consumer boom, posting record profits only to face a sharp decline in 2023 as supply lines and consumption normalized. Much of the industry benefited again as the Red Sea conflict disrupted supply lines late last year, sending freight rates soaring again.

State-owned Deutsche Bahn, which has been struggling with infrastructure problems on its rail network, said on Sept. 13 it plans to use the proceeds from the sale of Schenker to “significantly” reduce its debt.

A DB Schenker employee works at a logistics center near Gothenburg, Sweden. (Nora Lorek/Bloomberg News)

Job retention and regulatory approvals

One key topic of the talks was preserving jobs in Germany. Verdi, the country’s most powerful union, made the unusual move last month to back CVC’s bid, saying the private equity firm could cut fewer jobs after the takeover. DSV responded with additional promises on jobs and investment, Bloomberg News reported.

DSV said on Sept. 13 that it had “made social commitments” for German employees that will last for two years after the closure. The company has pledged to invest about $1.1 billion over the next five years in Germany, “which will help ensure long-term growth and job creation.”

The transaction is subject to approval by the Supervisory Board of Deutsche Bahn and the German Ministry of Transport, as well as customary regulatory approvals.

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