Deutsche Bahn Hunts for Potential Buyers for Billion-Euro Deal in Unconventional Method
In an unexpected turn of events, Germany's railway giant, Deutsche Bahn, has taken an unconventional approach to sell its logistics subsidiary, Schenker. The corporation has decided to place an advertisement in a major US newspaper, the "Wall Street Journal," as a means to lure potential buyers.
The advertisement, buried in the technology section, falls just below a report on Amazon's ambitions to convert a popular board game into a movie. Deutsche Bahn's message to interested parties is straightforward: "Deutsche Bahn AG intends to sell the entire share capital of Schenker AG in an open, transparent, and non-discriminatory process." The planned takeover includes all stakes Deutsche Bahn has in the company and its subsidiaries.
The unusual approach raises questions whether Morgan Stanley and Goldman Sachs, renowned M&A banks, have struggled to find a buyer, prompting them to seek fortune amongst "Wall Street Journal's" readership. According to media reports, Deutsche Bahn anticipates billions in proceeds from the sale, possibly even surpassing double digits. The logistics subsidiary, Schenker, has been valued at up to 15 billion euros by financial circles, as reported by Reuters.
The company has justified the decision as a necessity to comply with European state aid law, which requires the announcement be made in an international publication with wide distribution. Nevertheless, experts in the field are left puzzled, having never seen a major transaction conducted through a media advertisement.
Mark Miller, an investment banker from Carlsquare, explains, "I have never seen this in large transactions. Usually, companies work with specialized M&A consultancies to find a suitable buyer among their industry contacts, or they use professional databases like Mergermarket." Discussing the possible motivation behind such an unconventional move, Miller opines, "It could indicate that the sales process is proving more challenging than they expected."
Yet, press releases and interviews can play an important role in generating interest and garnering media exposure during a transaction, though Miller prefers a more subtle approach, such as a press interview or podcast. The impact of Deutsche Bahn's advertising strategy will be clear by mid-January, as the company aims to complete the sale process by then.
Sources:
Insights:
- Deutsche Bahn has previously engaged with other potential buyers through channels like the German railroad network, given the reliance of logistics companies on reliable transport services.
- The logistics and transportation market is intensely competitive, with businesses often re-evaluating their portfolios to sustain a competitive edge.
Deutsche Bahn recently decided to sell its logistics subsidiary, Schenker, taking an unconventional approach by placing an advertisement in the "Wall Street Journal" to attract potential buyers. The move has sparked debate among financial experts, particularly the involvement of Morgan Stanley and Goldman Sachs, who are known for their expertise in M&A deals. The short advertisement includes the company's intention to sell the entire share capital of Schenker AG in a transparent and non-discriminatory manner, and it requests interested parties to reach out by mid-January to Goldman Sachs and Morgan Stanley.
Sources indicate that Deutsche Bahn expects proceeds in the billions, and some financial analysts estimate Schenker's valuation to be up to 15 billion euros. The company's spokesperson cited legal reasons for the need to publish the announcement in an international publication with wide distribution. While experts acknowledge the announcement complies with European state aid law, they consider it an unusual approach. Though it is not unheard of to employ press work in support of a transaction, an advertisement for such a purpose is relatively new.
Nevertheless, experts emphasize that deal progress depends on advising potential buyers and addressing their concerns. Deutsche Bahn's method could indicate that they did not receive positive responses from their approach list. Other experts claim print advertisements may hasten uncustomary sales processes or reveal the seller's desperation.
In a more subtle approach, some advisers recommend alternative strategies like press interviews or podcasts to generate interest and address buyers' concerns without relying on advertisements. As the deadline for the sale process approaches, it remains to be seen whether Deutsche Bahn's unconventional tactic yields successful results.
