Lots of movement in the UK’s transport sector this morning: Deutsche Bahn, the German state-backed travel operator, has agreed to buy UK bus and train company Arriva for the bargain price of £1.6bn. The deal will create Europe’s largest passenger transport group, which is expected to have a combined worth of £16bn, transporting around 10 million passengers a day. Crikey.
Deutsche Bahn will pay 775p a share for Arriva, up from its original bid last month of 700p a share. Sunderland-based Arriva is pretty busy these days – not only does it operate commuter services in big cities, it also runs the CrossCountry train network, which was run by Virgin up until a few years ago.
This isn’t Deutsche Bahn’s first foray into the UK market - as well as its domestic operations in Germany, it already runs Chiltern Railways and rail freight services in the UK. Those who believe that a bit of Teutonic rigour could be just what the UK rail system needs will note with approval that the Chiltern line is one of the best run in the country(is it entirely coincidental that it’s the line which Network Rail boss Iain Coucher uses?).
Nor does Arriva only serve UK customers. In fact its European arm (it operates in 12 European countries) is what made it such an appealing target for Deutsche Bahn in the first place.
European expansion is what seems to be at the forefront of Deutsche Bahn chief exec Rudiger Grube’s mind, as he announced today that he hopes the deal will ‘strengthen Deutsche Bahn’s strategic positioning in Europe, principally through Arriva’s successful targeting of Europe’s increasingly liberalised and fast growing transport markets which are of strategic interest to Deutsche Bahn.’ Phew, got all that? Sounds like a station PA announcement.
He also said that: ‘Arriva will give Deutsche Bahn the platform [geddit?] to expand in Europe and enhance its position as one of Europe’s leading passenger transport groups.’
Naturally, not everybody is onboard with the sale. Coming as it does so soon after the Cadbury/Kraft deal, there is bound to be criticism that here is another successful British company being flogged off cheap to a foreign rival. Especialy since the buyer is effectively the German government...
But, in the transport sector as elsewhere, the time for such complaints is past – we are where we are and this deal could be good news for customers and staff alike: Grube has already said that this ‘is a merger for growth, sustainability and profitability’ and therefore he hopes to ‘create workforce rather than reduce workforce’.
A statement which Arriva workers’ oppos over at Network Rail – where 500 jobs losses have just been announced – might view with envy.
In today's bulletin:
Borrowing hits record high, but could boost Labour...
Ryanair first as O'Leary backs down
Punctual Deutsche Bahn punches Arriva's ticket for £1.6bn
No more bribes, say foreign firms in Russia
Pearl & Dean: the reel deal?