Deutsche Bahn Considers Reviving Sale of Arriva Unit

Deutsche Bahn AG is considering reviving a sale of its Arriva transport business as it seeks to focus on its core German railway operations amid a broader overhaul, people with knowledge of the matter said.

(Bloomberg) — Deutsche Bahn AG is considering reviving a sale of its Arriva transport business as it seeks to focus on its core German railway operations amid a broader overhaul, people with knowledge of the matter said.

The German state-owned railroad operator is working with advisers to informally gauge interest from potential buyers including investment funds and rival transport companies, the people said, asking not to be identified because the information is private. It may seek a valuation of €1 billion ($1.1 billion) to €2 billion in any deal, according to the people.

Sunderland, England-based Arriva runs bus and train services in Britain and several continental European countries, according to its website. It operates some of London’s iconic red double-decker buses, as well as the London Overground network of suburban rail services and Chiltern Railways, which runs passenger trains between the UK capital and Birmingham.

Any sale of Arriva would help Deutsche Bahn streamline its operations and slash debt as it seeks to modernize its domestic railroad operations. Deutsche Bahn said last month it will explore a sale of its DB Schenker logistics unit and firms are currently pitching for sellside roles. A divestment could value that business at around €20 billion, Bloomberg News has reported.

Deutsche Bahn acquired Arriva in 2010 for £1.6 billion ($2 billion). 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.

There has been a flurry of deal activity in the bus and train sector in the UK. DWS Infrastructure agreed last year to buy bus operator Stagecoach Group Plc, beating out National Express Group Plc.

Also in 2022, Go-Ahead Group Plc, the operator of London’s commuter trains and iconic double-decker buses, was acquired by an investor group backed by Australian transportation firm Kinetic Holding Co., which beat out rival suitor Kelsian Group Ltd. And British bus and train operator FirstGroup Plc rejected a takeover approach from I Squared Capital.

Buyout firms including Carlyle Group Inc. and Apollo Global Management Inc. have previously pursued Arriva, which competes with companies including France’s Keolis. While Deutsche Bahn would prefer to exit Arriva before selling Schenker, there’s no certainty the company will proceed with either transaction, the people said.

A representative for Deutsche Bahn declined to comment.

–With assistance from Josefine Fokuhl, Dinesh Nair, Kamil Kowalcze and Christopher Jasper.

More stories like this are available on bloomberg.com