Deutsche Bahn buys Britain’s Arriva for 1.6 billion pounds

Germany’s state-owned rail operator Deutsche Bahn took further advantage of the liberalisation of European transport networks on Thursday with an agreed all-cash takeover of Britain’s Arriva.

The 1.6-billion-pound (1.8-billion-euro, 2.4-billion-dollar) deal, unveiled in a statement to the London Stock Exchange, gives Deutsche Bahn one of Britain’s top transport firms to add to its acquisition of Chiltern Railways.

“Arriva offers us excellent opportunities. Without this acquisition, we would need many years to gain a competitive edge like this,” said Deutsche Bahn’s chief executive Ruediger Grube.

Arriva would give Deutsche Bahn “the platform to expand in Europe and enhance its position as one of Europe’s leading passenger transport groups,” he added.

Richard Broadbent, chairman of Arriva, said Deutsche Bahn’s offer “fully reflects” the value of the British group.

And chief executive David Martin told reporters in Berlin by videoconference that he would recommend the offer to the firm’s shareholders, adding that the takeover would likely not be fully completed until mid-August.

However, he warned that “any other firm” could make an offer for Arriva “at any other time.”

For his part, Grube said: “We will not make this acquisition at any price … we are not prepared to take part in a ruinous bidding war.”

Despite Deutsche Bahn’s international expansion, Grube stressed the firm would not neglect its home market. “We will continue to focus on improving our core business at home,” he said.

“The stronger we are in Europe, the more secure our jobs are in Germany,” he added.

He said Deutsche Bahn expected to sell Arriva’s activities in Germany to satisfy competition authorities.

Nevertheless, he insisted his company was determined to seize opportunities arising from the liberalisation of Europe’s transport networks.

Over the coming years, Deutsche Bahn’s share of regional transport in Germany was expected to shrink, he said.

“At the same time, the regional transport markets in Europe will be further liberalised. We can use this opportunity to take part in this market development within Europe or will see a downsizing of our operations.”

“Deutsche Bahn aims to drive the market rather than be driven by it.”

Arriva, based in the north-eastern city of Sunderland, operates both train and bus services in Britain, employing over 40,000 people. It has activities in 11 other countries and turned over 3.15 billion pounds in 2009.

Deutsche Bahn has operations in 150 countries and employs about 240,000 people, three-quarters of whom are based in Germany. Revenues last year were 29.3 billion euros.

Grube stressed the Arriva brand would be untouched following the acquisition.

“Arriva is Arriva and will remain Arriva,” he said.