Deutsche Bahn seeks interested parties for billion-euro deal by advertisement

In its search for a buyer 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 below a report on online mail order company Amazon, which wants to turn a well-known board game into a movie: Deutsche Bahn has advertised for buyers for its logistics subsidiary Schenker in the "Wall Street Journal".

"Deutsche Bahn AG intends to sell the entire share capital of Schenker AG in an open, transparent and non-discriminatory process," reads the simple advertisement. The planned takeover includes all shareholdings of the seller, Deutsche Bahn, in the company and its subsidiaries. Interested parties are asked to contact the investment banks Goldman Sachs and Morgan Stanley by mid-January; the Group has attached the relevant e-mail addresses to the advertisement.

A remarkable procedure, even absurd for some financial experts, considering the sums involved in a potential 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, are unable to find a buyer and are therefore looking for a chance hit in the "WSJ" readership. According to media reports, Deutsche Bahn is expecting proceeds in the billions, and at best this could even be in double figures. Schenker is said to have been valued at up to 15 billion euros in financial circles, the news agency Reuters reported. Deutsche Bahn had been preparing the sale of its logistics subsidiary for months. It hopes to use the proceeds to pay off part of its gigantic mountain of debt.

But a printed advertisement for this? And in an English-language business publication to boot? What M&A experts consider to be an unusual approach is a measure without alternative from Deutsche Bahn's point of view. "For legal reasons, a public announcement had to be made in a print medium with international distribution so that it reaches all potential interested parties," a company spokeswoman said when asked. The measure complies with European state aid law for a competitive, transparent, non-discriminatory and unconditional tendering procedure.

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Is that the case? Industry experts shake their heads in amazement. It can be documented "that the world knew about it and that the seller - in this case indirectly the German state - did not exclude anyone as a prospective buyer. This means that the process cannot be challenged by legal action," explains Mark Miller from the Hamburg investment bank Carlsquare. However, the consultant considers a print advertisement to be unusual. "I have never seen this in large transactions," says Miller, who has been active in the industry for more than 20 years.

Usually, a company turns to specialized M&A consultancies, which find a suitable buyer among their contacts in the respective industry. According to Miller, deal databases such as Mergermarket, which are only accessible to investment banks and financial investors, also help with this. "I am sure that our colleagues at Goldman Sachs and Morgan Stanley have not forgotten any hot candidates," says Miller, referring to the two investment banks commissioned by Deutsche Bahn. "But sometimes buyers come from unusual places."

According to the consultant, the print advertisement could also indicate that the sales process is proving more difficult than the company thought. "An investment bank must claim to know the relevant buyers who promise attractive offers," says Miller. "If a process like this is then made public, it's likely that no one on the approach list has taken the bait."

However, press work in the run-up to a transaction can certainly make sense. However, Miller says that he would not place an advertisement for this, but take a more subtle approach. For example, with an interview in the press or a podcast. Whether Deutsche Bahn's efforts have paid off will become clear on January 15 at the latest. The search for a buyer should be completed by then.

This text first appeared on capital.de