“Never seen”
Bahn is looking for interested parties for a billion-dollar deal via an advertisement
By Daniel Hüfner
December 22nd, 2023, 12:45 p.m
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When looking for buyers for its logistics subsidiary Schenker, Deutsche Bahn is hoping for offers from readers of a major US newspaper. An act of desperation or simply necessity?
The advertisement is hidden in the technology section, directly under a message about the online mail order company Amazon, which wants to make a film of a well-known board game: In the “Wall Street Journal”, Deutsche Bahn advertised for buyers for its logistics subsidiary Schenker.
“Deutsche Bahn AG intends to sell the entire share capital of Schenker AG in an open, transparent and non-discriminatory process,” says the simple advertisement. The planned takeover includes all interests of the seller, the railway, in the company and their subsidiaries. Interested parties are asked to contact the investment banks Goldman Sachs and Morgan Stanley by mid-January; the group has included the relevant email addresses in the advertisement.
A remarkable approach, even absurd for some financial experts, when you consider the sums that could be involved in a possible deal – and which banks are behind the deal. To put it bluntly, one could ask whether Morgan Stanley and Goldman Sachs, two of the most renowned M&A banks, cannot find a buyer and are therefore inevitably looking for a chance hit among the “WSJ” readership. According to media reports, the railway is expecting revenue in the billions, at best it could even be double-digit. Schenker is said to have recently been valued in financial circles at up to 15 billion euros, the Reuters news agency reported. Deutsche Bahn had been preparing for the sale of its logistics subsidiary for months. She hopes to use the proceeds to pay off part of her gigantic mountain of debt.
But a printed search ad for that? What’s more, in an English-language business postille? What M&A experts consider to be an unusual approach is, from the railway’s perspective, a measure with no alternative. “For legal reasons, a public announcement had to be made in a print medium with international distribution so that it reached all potential interested parties,” said a company spokeswoman when asked. The measure complies with European state aid law for a competitive, transparent, non-discriminatory and unconditional tendering process.
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Is that so? Industry experts tend to shake their heads in surprise. It can be documented in this way “that the world knew about it and the seller – here indirectly the German state – did not exclude anyone as a potential buyer. This means that the process cannot be challenged through legal action,” explains Mark Miller from the Hamburg investment bank Carlsquare . However, the consultant considers a print advertisement to be unusual. “I’ve never seen this before in large transactions,” said Miller, who has been active in the industry for more than 20 years.
A company usually turns to specialized M&A consultancies, which identify a suitable buyer among their contacts in the relevant industry. According to Miller, deal databases such as Mergermarket, which are only accessible to investment banks and financial investors, also help. “I’m sure that our colleagues at Goldman Sachs and Morgan Stanley haven’t forgotten any hot candidates,” says Miller, referring to the two investment banks commissioned by Deutsche Bahn. “But sometimes the buyers come from unusual places.”
According to the consultant, the print ad could also indicate that the sales process is more difficult than the company thought. “An investment bank must have the right to know the relevant buyers who promise attractive offers,” says Miller. “If a process like this is brought to the public, then no one on the list of speakers will be interested.”
However, press work in advance of a transaction could definitely make sense. But he wouldn’t place an ad for it, but would proceed more subtly, says Miller. For example with an interview in the press or a podcast. Whether Deutsche Bahn’s efforts were worth it will become clear by January 15th at the latest. Then the buyer search should be completed.