Deutsche Bahn 'nears Arriva deal'

[bnm]

From the BBC:

"German national rail company Deutsche Bahn is close to sealing a £1.6bn takeover of UK transport group Arriva, according to reports.

Deutsche Bahn confirmed last month that it had tabled a bid for Sunderland-based Arriva.

Now it has been reported that its board is meeting this week to approve the bid with an announcement expected in the next couple of weeks.

Arriva declined to comment. Nobody from Deutsche Bahn could be reached.

Deutsche Bahn has not disclosed the value of its cash offer but the financial newspaper City AM said it could be between 750p and 775p.

Deutsche Bahn already operates the Chiltern Railways route between London and Birmingham, and also runs the UK's biggest rail freight operator, Deutsche Bahn Schenker.

Arriva has operations in 12 countries and runs several train and bus networks in the UK."

 

[DaveNewcastle]

Monday, 19/04/10, 12:22

Deutsche Bahn Supervisory Board To Discuss Arriva Wed-Source

FRANKFURT (Dow Jones)--The supervisory board of Deutsche Bahn AG will discuss a possible bid for U.K. transport company Arriva PLC at a meeting Wednesday, a person close to the supervisory board told Dow Jones Newswires Monday.

Over the weekend, another person familiar with the matter said Deutsche Bahn is conducting due diligence on Arriva.

The German company had said in March it was interested in Arriva. Deutsche Bahn, which is controlled by the state, made an approach to Arriva last month valued at 700 pence a share, people familiar with the matter said at the time. The approach fell short of a formal bid and wasn't acceptable to Arriva's board, another person said.
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Reuters
BERLIN, April 19 (Reuters)
German rail and logistics operator Deutsche Bahn [DBN.UL] plans to offer 2.7 billion euros including debt for British train and bus operator Arriva (ARI.L), sources familiar with the matter told Reuters on Monday. Deutsche Bahn will offer 775 pence per share for Arriva, and finance the bid by issuing bonds, the sources said.

The company supervisory board would approve the offer on Wednesday, with the deadline set for Thursday, they added.

The sources said a Deutsche Bahn special committee should be able to raise the offer should a higher counter bid emerge.

 

[merlodlliw]

This is interesting Dave, a few murmurs have been doing the rounds today,

 

[DaveNewcastle]

Arriva on Monday said that Deutsche Bahn had indicated it was prepared to pay GBP1.54 billion for Arriva, as talks between the two companies accelerate.

Deutsche Bahn, which made a GBP1.2 billion approach to Arriva in March, would gain access to Arriva's unique footprint in 12 European markets through a deal, allowing it to participate in the opening up of transport operators in the Continent.

In a stock exchange statement Monday, Arriva said Deutsche Bahn said it was willing to make an offer of 775 pence in cash for each Arriva share, along with a proposed final dividend of 18.8 pence per Arriva share.

 

[route:oxford]

Looks like another inter-city route is about to be nationalised...

(Albeit by the national railway of another european country)

 

[WatcherZero]

Surely the main value of the company must be in its bus networks, for a rail franchise that two years later may be worth nothing as its not renewed you could only attach the expected profitability of the remaining years.

 

[merlodlliw]

Its all over the today programme on the BBC, the deal will go through tomorrow
it seems.

 

[jopsuk]

True. Arriva also have various continental bus and train operations- including in Germany- that may well be part of what DB are after.

 

[The Planner]

I mentioned it a while back, Germany is also going through a re-franchising process and DB lost some of their contracts to Arriva. Buying them back gets them the franchises back !

 

[yorksrob]

Right - so we break up and sell off a state run monopoly because we've all been told how expensive and inefficient state owned monopolies are, and sell our railways to ....... a state owned monopoly.

I suppose at least if there is a profit to be made from these franchises (either from government subsidy or Chiltern commuters) it may eventually be ploughed back into secondary and branch lines (albeit German ones).

This country is beyond satire.

 

[WatcherZero]

Well if the planner is right then Arriva is more efficent and cheaper than the state run DB but because DB has has state backed borrowing and large reserves it just buys its smaller and nimbler opponent.

 

[gordonthemoron]

- nimbler
+ crapper

Arriva run Metronom trains in North Germany are excellent, if a tad on the large side for the number of customers. Arriva run Alex trains in Bavaria are awful

 

[DaveNewcastle]

Maybe not a surprise, but when you read DB's CEO's confidence, it makes you realise how ambitious DB is!

COQUELLES, France, April 20 (Reuters) - Eurotunnel SA (GETP.PA), the operator of the Channel tunnel, expects Deutsche Bahn DBN.UL trains to run between London and the continent by the start of the London Olympics of 2012.
The German state rail operator, which is in current talks to buy British transport company Arriva (ARI.L), will then have more clout to compete with Eurostar on the lucrative cross channel market.

Asked when Deutsche Bahn would be expected to get the authorisation by tunnel regulators to run trains through Eurotunnel, CEO Jacques Gounon said it would be around the time of the Olympic games.

"Deutsche Bahn has a real willingness. We can trust a house that powerful. When they decide to do something they do it," he said, speaking on margins of a windfarm inauguration in northern France.

Eurotunnel, which was hit by bad weather conditions in northern France this winter and a rail accident in Belgium, said the first quarter had been very difficult.

But strong customer traffic during the Easter weekend and increased traffic from airline passengers stranded by the volcanic ash cloud would improve growth for the first half.

"You will see it will be a good rise (in revenue)," said Gounon.

Eurotunnel is already expected to report a growth in the first half of 2010, due to poor results in the first half of 2009 after a fire in September 2008 handicapped traffic until February.
(Reporting by Michel Rose; Editing by Rupert Winchester)

(We can ignore the muddled reporting of the years in the last para.)

 

[ladydsm]

Talk of the take over was in the telegragh today dont forget db were the ones who under cut colas by 2.5 million to get the sandite work soon the railways in this country will be owned by the germans and french what a sell out. but who cares as long as we get paid.

 

[WatcherZero]

Well our nuclear industries already french owned.

 

[A60K]

Maybe not a surprise, but when you read DB's CEO's confidence, it makes you realise how ambitious DB is!(We can ignore the muddled reporting of the years in the last para.)

Jacques Gounon is Eurotunnel's CEO, not Deutsche Bahn's. I agree DB are ambitious though, the Arriva takeover being an example of that.

Having technical approval to run an ICE3 through the tunnel won't necessarily mean services starting immediately afterwards though. May 2012 is pushing it, and perhaps December 2012 is more likely.

The current fleet of ICE3 sets is stretched to (and beyond) the limit with existing workings, and they will need to have received quite a few of the additional sets that are on order before they can consider running London services.

They've also got the ongoing technical problems to deal with, so it's quite possible that the initial sets of the new order will be used just to release current sets for maintenance rather than being used for service expansion.


As far as I can see the years in the last paragraph are correct - the fire was in 2008, meaning revenue affected in the first half of 2009, but it will be higher in 2010?

 

[tbtc]

Eurotunnel is already expected to report a growth in the first half of 2010

...apart from the slight issue with the snow?

 

[Donny Dave]

I think a couple of weeks worth of full trains above and beyond their normal timetable will outweigh 4 or 5 days of disruption when it comes to revenue, especially if people are paying full price for tickets compared to buying cheaper tickets in advance.

 

[button_boxer]

(We can ignore the muddled reporting of the years in the last para.)

Looks right to me. Fire in 2008 meant early 2009 was poor, which means the year-on-year growth figures will be higher than they should be as an artefact of the way they're calculated (comparing a worse than expected 2009 with a normal 2010).

 

[DaveNewcastle]

(Hey guys! - I said lets ignore the reporting of the years! Not : lets concentrate on the reporting of the years!)

Looks right to me.

Agreed, BB. The figures for comparative quarters WILL show growth as reported, but WON'T show growth from 4th Q of last year to 1st Q of this year.
I think the reporter used a poor way of describing the situation, listing the years in reverse order but not including each quarter in that list.

But I'm sure you all got the interest of the interview - that there is an expectation that DB will be operating through the tunnel, alongside Eurostar.

 

[Failed Unit]

I suspect that the snow incident shows that the Eurostar may not do as well in a fire as expected, it is not always possible to get the train out. So if the existing stock can't be easily rescued or evacuated then why not use an ICE? Good luck to DB I don't know how much demand say Frankfurt - London would get but that is their risk.

 

[Peter Mugridge]

We did London - Frankfurt in August last year for a wedding; on the way out with a nice 40 minute or so connection at Bruxelle roughly two dozen people ( including ourselves ) changed from the Eurostar onto the ICE, although I don't know how many were only going as far as Aachen or Köln.

That was a Thursday; we came back on the Sunday with a 90 minute or so connection - not sure how many changed across because we didn't go direct from the ICE to the Eurostar check in - nosed round the shops in the underpass at Bruxelle first.

A direct service would no doubt pick up more passengers than a changing service.

 

[gordonthemoron]

I have done Köln-London via Brussels with the ICE several times, there appears to be 20-30 people who connect in Brussels.

However, the last time I did it, the bloody ICE packed up just short of Brussels North Station and we had to walk alongside the track

 

[blacknight]

Just because they take over parent company don't mean they get route automatically.
Look at situation recently on ECML when Spanish consortium were looking to buy out National Express surely DfT will have final say so XC could yet end up with Directly Operarated Railways under British state ownership.

 

[A60K]

Just because they take over parent company don't mean they get route automatically.
Look at situation recently on ECML when Spanish consortium were looking to buy out National Express surely DfT will have final say so XC could yet end up with Directly Operarated Railways under British state ownership.

While there may be a standard clause in franchise agreements (as with many service contracts) stating that the awarder reserves the right to cancel the contract if there is a change of ownership, I would be absolutely amazed if there was even the remotest chance of the DfT doing so.

Those causes are generally there to protect the awarder if someone awful buys the contract holder - DB purchasing Arriva would be welcomed with open arms by the DfT.

Far from making XC the next target of DOR, I suspect DB's takeover will remove the possibility of it happening. There had been doubts expressed about Arriva's long-term prospects with the franchise and a takeover will resolve them.

 

[merlodlliw]

While there may be a standard clause in franchise agreements (as with many service contracts) stating that the awarder reserves the right to cancel the contract if there is a change of ownership, I would be absolutely amazed if there was even the remotest chance of the DfT doing so.

Those causes are generally there to protect the awarder if someone awful buys the contract holder - DB purchasing Arriva would be welcomed with open arms by the DfT.

Far from making XC the next target of DOR, I suspect DB's takeover will remove the possibility of it happening. There had been doubts expressed about Arriva's long-term prospects with the franchise and a takeover will resolve them.

The DFT & WAG will welcome DB, The All Wales Franchise stock is falling apart, and sorry to say Senior Management at Pentaeith house have acted
like headless chickens carrying too much personal baggage instead of looking to win the next franchise,

 

[j0hn0]

I have done Köln-London via Brussels with the ICE several times, there appears to be 20-30 people who connect in Brussels.

However, the last time I did it, the bloody ICE packed up just short of Brussels North Station and we had to walk alongside the track

ICE's are certainly pushed to the max in this country.

I will be going from Düsseldorf to Rugby tomorrow - change at Köln, Brussels and St Pancras. Not the first time i have done it, would much prefer a direct service to St Pancras, although i can'T say that I will be living here for that much longer anyway

Until they get rid of the "change trains and check in" then the railways will never be able to realistically compete with air travel.

 

[anthony263]

The DFT & WAG will welcome DB, The All Wales Franchise stock is falling apart, and sorry to say Senior Management at Pentaeith house have acted
like headless chickens carrying too much personal baggage instead of looking to win the next franchise,

The WAG will certainly love DB especially if they are willing to Purchase new rolling stock in exchange for a longer franchise when the wales ranchise comes up for renewal in 2018?

I wonder what livery DB will paint their trains in if they take over arriva, maybe a livery similar to the old valley lines livery before the trains were painted into arriva corporate livery

 

[gordonthemoron]

This is the livery of the Arriva run Metronom trains in north germany:

wonder why Arriva didn't use it elsewhere?
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mind, the livery used on the dodgy Alex trains looks a tad familiar:

the Alex train is passing under Munich's Hackerbrücke which is just outside my office

 

[HSTfan!!!]

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