Brexit Scraps More IPOs as Deutsche Bahn Won’t Float Units

  • German rail company had evaluated listings of Arriva, Schenker
  • EU vote caused ‘far-reaching changes,’ Deutsche Bahn says

Deutsche Bahn bought Arriva Plc for 2.4 billion pounds ($3 billion) including debt in 2010, and subsequently delisted the shares.

Photographer: Frantzesco Kangaris/Bloomberg

German rail operator Deutsche Bahn AG shelved plans to list its U.K. bus and rail unit Arriva and logistics service provider DB Schenker, saying Britain’s vote to leave the European Union derailed its markets.

“Unfortunately, the world has fundamentally changed since Brexit,” Chief Executive Officer Ruediger Grube said in an interview with Dpa-AFX. A spokesman for the company confirmed the comments. “We’d be throwing money out of the window” if the sale were to go ahead, Grube added.

That adds to a list of European deals put on hold in the wake of the June 23 referendum. Last week financial-software maker Misys Ltd. canceled its planned offering and Telefonica SA’s O2 said it’s postponing a potential listing of the U.K. mobile-phone unit.

The pound’s fall since the Brexit vote has hurt investor appetite for European initial public offerings. Uncertainty over the conditions of the U.K.’s EU exit, thrown into turmoil by a court ruling Thursday, has further undermined demand.

Deutsche Bahn bought Arriva Plc, at the time the biggest public transport company in Europe not in national hands, for 2.4 billion pounds ($3 billion) including debt in 2010, and subsequently delisted the shares. Arriva has more than 60,000 employees and the deal was Deutsche Bahn’s largest acquisition. 

DB Schenker, which Deutsche Bahn added in 2002, is Europe’s largest road transport company. It’s also among the top three forwarders of ocean and air freight, and has 66,000 employees. The railway operator in July cut its revenue forecast for the unit.

The move to scrap the Arriva and Schenker IPOs is the latest setback for Deutsche Bahn’s efforts to raise funds through flotations, which have faced political opposition in Berlin since the idea was introduced. After the carrier swung to a 1.3 billion-euro ($1.44 billion) net loss in 2015, the railway’s supervisory board asked management to come up with a plan for bringing in outside investors.

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