German Rail Operator to Buy British Transport Group

German Rail Operator to Buy British Transport Group

Deutsche Bahn, the largest state-owned railway company in Germany and the biggest railway operator in Europe, has agreed to acquire Arriva plc, the third largest transport group in the UK. The German group will pay consideration of £1.58 billion for the British listed company (a price of 775p a share).
Arriva’s largest investors had previously rejected an offer of £1.2 billion made by the German company. Shareholders will now be asked to approve the takeover. Under the terms of the deal, they will be entitled to retain last year’s proposed final dividend, to be paid by May 10.
Arriva is based in Sunderland, in the North-East of England, and operates bus services in large cities and runs a nationwide train network. It operates a fifth of London’s buses. However, in recent years it has ventured into Europe and its European business now accounts for half of its turnover, with operations in some 12 European countries. The company employs approximately 40,000 staff.
Deutsche Bahn has 239,000 employees. The group has made acquisitions abroad but is keen to expand further beyond the German borders as it faces increased competition from national rivals. CEO Dr Rüdiger Grube said: “Arriva will give Deutsche Bahn the platform to expand in Europe and enhance its position as one of Europe’s leading passenger transport groups.”
Earlier this year, Arriva entered into negotiations with France’s largest train operator SNCF, but no deal resulted from the talks. However, could this be the beginning of the creation of a number of European-wide transport groups? The trend certainly seems to be towards consolidation of this industry at a European level.