(Bloomberg) -- DSV A/S has committed to limit layoffs at Deutsche Bahn AG’s logistics arm in a move to tilt the bidding war for the unit toward the Danish company, according to people familiar with the matter.
The firm sent a letter to Deutsche Bahn management and government representatives in recent days pledging to limit job cuts to between 1,600 and 1,900 roles at DB Schenker’s German headquarters, the people said. They also said they won’t reduce blue-collar jobs, according to the people, who asked not to be identified because the information is private.
The ultimate number is likely going to be lower because Schenker is currently undergoing its own streamlining program that isn’t reflected in DSV’s calculations, the people said. The company’s move comes after Verdi, Germany’s most powerful labor union, made the unusual move of supporting a consortium backed by private equity firm CVC Capital Partners Plc.
While Deutsche Bahn has signaled to both suitors it isn’t happy with their proposals yet, DSV’s €14 billion ($15.5 billion) offer is currently preferred, some of the people said. CVC has bid around the same amount, but tied a small portion of the purchase price to the condition that Schenker meets its own profit targets over the next few years, people familiar with the matter said last week.
That condition is seen as a slight disadvantage for CVC, though no decision has been made yet and both bidders could still improve their offers, the people said.
The Verdi labor union estimated that 5,300 more jobs would be at risk if Deutsche Bahn were to sell the unit to DSV instead of CVC, according to a memo it sent to Deutsche Bahn supervisory board members and government representatives last week.
In its letter to Deutsche Bahn, DSV said it would seek to nominate some Schenker executives to its own top ranks, according to the people. It also pledged to integrate some of its own German operations into Schenker to reflect the rival’s significance, the people said.
DSV also plans to invest €1 billion over three to five years in the German infrastructure, terminals and offices of Schenker, one of the people said. A representative for DSV declined to comment. Reuters reported on the pledges earlier Wednesday, citing unidentified people.
A spokesperson for Deutsche Bahn said the group is in advanced discussions with bidders, declining to comment on details.
“It remains the case that a sale must be economically advantageous for Deutsche Bahn,” the spokesperson said in a statement. “The same, pre-determined regulations for securing employment also apply to all bidders. The primary goal of a sale is to significantly reduce group debt and advance Deutsche Bahn’s concentration on its core business.”
--With assistance from Christian Wienberg.
©2024 Bloomberg L.P.
