Germany’s SPD agrees plan to privatize Deutsche Bahn - update
Germany’s ruling Social Democrats have agreed after a long and tortuous internal dispute to endorse coalition plans to partially privatize rail operator Deutsche Bahn, one of the world’s largest transportation groups.
SPD sources told Reuters on Monday that party leaders had agreed to a slimmed down privatization of Deutsche Bahn’s rolling stock and logistics, cutting the upper limit of the flotation to 24.9% from a previous 49.9%. The 34,000 km of track will remain in government control. The government values the flotation of a 25% stake at €3 billion. SPD officials said on Monday they expect the initial public offering to raise €3 to 5 billion. Proceeds are expected to go to the government and to Deutsche Bahn to finance growth plans of the rail and logistics giant, already Europe’s largest, with interests spreading from Europe to Asia, the Middle East and North America.
For months the coalition of Chancellor Angela Merkel’s conservative Christian Democrats (CDU) and the SPD have clashed over plans to list Germany’s last big state-owned firm, which had a turnover of more than €31 billion last year. There was no immediate confirmation on details of the compromise, hammered out in a late-night meeting at SPD headquarters on Sunday. But Finance Minister Peer Steinbrueck and other SPD leaders said a solid compromise had been reached. The CDU expressed cautious approval, saying the slimmed-down initial public offering showed the grand coalition government was still capable of pushing forward with its reform agenda.
TEST FOR BECK
It was also an important leadership test for SPD chairman Kurt Beck. Beck had backed the privatization along with other SPD leaders but was stopped by a revolt from left-wing SPD leaders at a party congress in November. “We’ve reached a compromise that everyone backed,” said SPD deputy leader Andrea Nahles, a leader of the party’s left wing. “It’s a compromise that will allow Deutsche Bahn to raise funds but won’t give shareholders a blocking minority.” The party’s left wing criticized the earlier proposal to privatize up to 49.9% of Deutsche Bahn because they were worried about private investors’ influence on the company.
Hermann Scheer, an erstwhile critic of the privatization, said he was relieved that the larger sale had been prevented. “It’s a welcome move,” he said. “But there are still some open questions to be resolved. We need to ensure, that that 24.9% stake won’t turn out to be more some day.” But that is precisely what the CDU wants -- to leave the door open for further increases. “We’re open to talking about a start like this,” said CDU deputy and rail expert Hans-Peter Friedrich. “But it’s important that we don’t forever rule out a further flotation.” Deutsche Bahn had no comment on the compromise.
It has 80 subsidiaries -- including sea, trucking and air freight operations. Freight transport accounts for 50% of its sales, up from 20% in 2000. Its subsidiaries include Schenker, Railon and Stinnes. Deutsche Bahn’s board had hoped to achieve a partial listing this year but analysts have said the coalition would probably have to agree by April 28 to achieve that deadline. (Reuters)
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