By Anastasia Malikova, Jack Liang, Shir Lyn Lau, Hunter Pang (LSE), Nathaniel Baker, Lara Grosskopf, Samuel Tainsky (Cornell)
Photo: Guillaume Bolduc (Unsplash)
Overview of the deal
Acquirer: DSV
Target: Deutsche Bahn’s Logistics Business (Schenker)
Implied Equity Value: $11.99bn
Total Transaction Size: $15.95bn
Closed date: Exp. Q2 2025
Target advisor: Deutsche Bank (financial), Hengeler Mueller (legal)
Acquirer advisor: Nordea (financial), Freshfields Bruckhaus Deringer & Moalem Weitemeyer (legal)l), Morgan Stanley & Co. LLC (financial), Debevoise & Plimpton LLP (legal)
Danish logistics giant DSV has announced its largest acquisition to date, acquiring Deutsche Bahn’s logistics business in an all-cash transaction. valued at $15.95bn. DSV, one of the world's top transport and logistics companies, provides transportation and supply chain services across air, sea, and road. Deutsche Bahn’s subsidiary, Schenker is a global leader in logistics and transportation in Germany, with over 150 years of expertise in the field.
The deal positions DSV to enhance its global network and service capabilities, making it more competitive in a highly dynamic industry. The combined company is projected to generate pro forma revenue of approximately $42.86 billion and employ around 147,000 people across more than 90 countries. This acquisition is expected to strengthen DSV’s presence in Germany, a critical market for the company moving forward. In order to capitalize on this success, there are plans to invest EUR 1 billion ($1.09bn) in the country over the next 3-5 years.
“DB Schenker is one of the most powerful and innovative teams in transportation and logistics with more than 150 years of experience. The recent years have been the most successful in our company’s history and we have proven that DB Schenker is fit for the future. We are excited about the future prospects of the combined business. Together with DSV, our goal is to transform the industry and build a truly global market leader.” - Jochen Thewes, CEO of Schenker
Company Details (Acquirer - DSV)
DSV is a global logistics and transportation company that has become one of the world’s leading freight forwarders. The company offers its services in Europe, the Middle East, Africa, North America, South America, Asia, Australia, and the Pacific. The company operates through three primary segments: Road, Air & Sea, and Solutions. Through these segments, the company provides road freight services, air and ship charter services, and logistics designing and solutions services. All segments are connected by the shared purpose of keeping supply chains flowing in a world of change by ensuring smooth and efficient storage and distribution of customers’ goods.
Founded in 1976, headquartered in Hedehusene, Denmark
CEO: Jens H. Lund
Number of employees: 73,881
Market Cap: $53.09 billion (as of 10/14/2024)
EV: $57.11billion
LTM Revenue: $22.15 billion
LTM EBITDA: $2.54 billion
LTM EV/Revenue: 2.6x
LTM EV/EBITDA: 18.3x
Recent Transactions: S&M Moving Systems West, LLC (2023), Global Diversity Logistics, LLC (2023), Agility Global Integrated Logistics (2021)
Company Details (Target - Deutsche Bahn’s Logistics Business (Schenker))
Deutsche Bahn is Germany’s state-owned railway company and a global leader in transportation and logistics. Its vertically integrated business model covers both passenger services through DB Regio, DB Fernverkehr, and DB Arriva, as well as freight logistics via DB Cargo and DB Schenker. As a subsidiary of Deutsche Bahn, DB Schenker leverages its global network to provide customised supply chain solutions across land transport, air and ocean freight, and contract logistics.
Founded in 1935, headquartered in Dallas, Texas
CEO: Nick Jeffery
Number of employees: 13,300
Market Cap: $ 8.8bn (as of 10/03/2024)
EV: $ 18.9bn
LTM Revenue: $ 5.7bn
LTM EBITDA: $ 2.3bn
LTM EV/Revenue: 3.3x
LTM EV/EBITDA: 8.3x
Projections and Assumptions
Short-term consequences
DSV’s 15.95 billion acquisition of DB Schenker positions the entity as a dominant force for logistics operations around the world, with Europe being a particular strength for DSV to utilise as it continues its expansion into Germany and in competing regions. With over 1,800 locations in 130 countries, DB Schenker provides access to ships, planes, trucks, and land that can begin integrating to DSV’s previously competing operations. As it’ll take approximately 6 months for the transaction to close, DSV will consider assets owned by DB Schenker's as the entity begins paying down debt used to finance the takeover.
DB Schenker’s particular focus on sustainable initiatives, as seen through its “DB Code of Conduct” and Germany’s Act on Corporate Due Diligence Obligations in Supply Chains (LkSG), will strengthen DSV’s current sustainability measures as it continues to keep clients and contracting companies accountable for their pollution across their global operations. By marketing these combined initiatives, DSV can highlight the environmental benefits from synergies related to operations, such as DB Schenker’s Noise Reduction technology for its railcars.
Additionally, DSV’s enhanced global operations will position the company to better cater toward industry verticals catered to by both DSV and DB Schenker. With DB Schenker’s growth strategy focused on close partnerships with international entities and DSV’s growth strategy surrounding Acquisitions and client relations, DSV can grow with other companies in high-growth industries such as Consumer Technology, AI Intelligence, and Raw Materials.
Long-term Upsides
The acquisition of Schenker by DSV is poised to have significant long-term consequences for the company and the logistics industry at large. In terms of earnings, the merger will catapult DSV to the forefront of the global logistics market, with an expected pro forma revenue of approximately €39.3 billion based on 2023 numbers. This substantial increase in scale is likely to enhance profitability through improved operational efficiencies and broadened market reach. The integration is expected to generate cost synergies, partly through planned job cuts and streamlined operations, which should positively impact earnings over time despite the initial outlay of €14.3 billion financed through equity and debt.
Regarding the growth prospects of the logistics industry, the market remains highly fragmented, with the combined company holding only 6-7% market share. This fragmentation presents ample opportunities for growth, especially as global trade continues to expand and supply chains become more complex. The enhanced capabilities and expanded global network position DSV to capitalize on these growth opportunities effectively.
The likelihood of realizing cost and revenue synergies appears high. DSV's track record of successful acquisitions, often of companies larger than itself, demonstrates its ability to integrate operations smoothly. The shared business models, services, and values between DSV and Schenker facilitate this integration. Planned investments of around €1 billion in Germany over the next few years indicate a strategic focus on growth and efficiency, which should aid in achieving the projected synergies and enhancing overall competitiveness in a dynamic industry.
Risks and Uncertainties
Following this acquisition, DSV will become the world’s biggest logistics company, which subjects the transaction to scrutiny by antitrust and competition regulators in different jurisdictions. This regulatory landscape poses a significant risk of delays, conditions, and even outright rejections of the deal. Moreover, plans to cut between 1,600 to 1,900 jobs out of Schenker's German workforce of 15,000 means that DSV is poised to face strong opposition from the German labour union. Obtaining customary regulatory clearances and approval from the German Federal Ministry for Digital and Transport adds another layer of complexity and uncertainty to the transaction's timeline and ultimate approval.
As one of DSV's largest acquisitions to date, the merger presents significant challenges in terms of cultural and operational integration. The Danish origins of DSV and the German roots of Schenker bring different corporate cultures, management styles, and operational practices into play. The sheer scale of integrating their global networks, IT systems, and warehouses could disrupt operations in the short term, affecting customer service and operational efficiency.
The acquisition will inevitably lead to a reconfiguration of global supply chains. As the new entity optimises its combined network, there may be shifts in shipping routes, delivery strategies, and trade partnerships. While this reconfiguration aims to improve efficiency and reduce costs in the long term, it could cause short-term disruptions for clients and partners who must adapt to new systems and processes.