German railway Deutsche Bahn picks top bidders for freight subsidiary

German state-owned railway Deutsche Bahn has narrowed the list of potential buyers for freight logistics subsidiary DB Schenker down to four, sources familiar with the deal told dpa on Friday.

The potential bidders include private equity investors and companies from Europe and the Middle East, the sources said.

Deutsche Bahn has put DB Schenker up for sale and solicited non-binding bids for the subsidiary.

The remaining four potential buyers will now be provided more detailed information about DB Schenker's operations and financials before taking the next step of submitting binding offers.

Details of the non-binding bids, including the amounts offered for DB Schenker, were not disclosed as of Friday.

Sources close to the deal, however, said that the offers received so far are attractive and would make the sale of the freight subsidiary economically advantageous to Deutsche Bahn.

The bids suggest that the railway could earn more by selling than by continuing to operate the subsidiary, the sources said.

In December 2022, Deutsche Bahn's supervisory board instructed company management to "examine and prepare the sale of up to 100% of DB Schenker."

Deutsche Bahn began looking for a buyer at the end of last year.

The sale of the subsidiary, which is doing well economically, is expected to generate billions of euros. Deutsche Bahn expects to use the proceeds to reduce the railway's substantial outstanding debts, which have recently grown to around €34 billion ($37 billion).

Critics have long been calling for the sale because they believe that DB Schenker - with its high proportion of road, air and sea freight operations - does not fit in with Deutsche Bahn's core railway business.

Last year, Deutsche Bahn sold off its UK-based bus and rail operations subsidiary Arriva.