I Squared in Exclusive Talks to Buy Deutsche Bahn’s Arriva

I Squared Capital is in exclusive talks to acquire Deutsche Bahn AG’s Arriva transport business, which operates London’s iconic red double-decker buses, people with knowledge of the matter said.

(Bloomberg) — I Squared Capital is in exclusive talks to acquire Deutsche Bahn AG’s Arriva transport business, which operates London’s iconic red double-decker buses, people with knowledge of the matter said. 

The Miami-based infrastructure investment firm could finalize terms and financing as early as September, according to the people, who asked not to be identified discussing confidential information. The deal could value Arriva at about €1.6 billion ($1.7 billion), the people said.

A spokesperson for Deutsche Bahn noted that it has already said it wants to sell Arriva by the end of 2024 and the process is ongoing. The person declined to comment further.

A representative for I Squared declined to comment. Talks could still be delayed or fall apart, the people said.

Sunderland, England-based Arriva runs bus and train services in Britain and several continental European countries. As well as some London buses, it operates the London Overground network of suburban rail services and Chiltern Railways, which runs passenger trains between the UK capital and Birmingham.

German state-owned railroad operator Deutsche Bahn acquired the business in 2010 for about $3.7 billion including debt, according to data compiled by Bloomberg. Previous attempts to list or sell the unit failed in 2019, when bids came in well below book value. Since then, Arriva trimmed its footprint by selling businesses in Denmark, Serbia and Poland to turnaround specialist Mutares SE.

Bloomberg News reported in June that I Squared has emerged as the frontrunner for Arriva because other suitors only wanted parts of it. 

A sale of Arriva would help Deutsche Bahn streamline its operations and slash debt as it seeks to modernize its domestic railroad operations. Deutsche Bahn is also exploring a sale of its DB Schenker logistics unit, which could be valued at around €20 billion.

–With assistance from Gillian Tan.

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