Private equity loses DB Schenker deal, despite union support

• It's not unusual for a German company to pick a strategic acquirer over a financial sponsor. After all, this is the country where private equity firms were once derided as locusts.
• But, in this case, the German labor union actually preferred private equity, arguing that a DSV victory could cost 5,300 more jobs.

Zoom in: CVC and DSV offered comparable enterprise valuations via a straight-up acquisition.

• CVC also proposed an alt structure whereby Deutsche Bahn could have reinvested to maintain a significant ownership stake. That bid was at a higher valuation, around €16 billion, with Deutsche Bahn receiving a guaranteed return upon an IPO.
• Deutsche Bahn seems to believe the DSV deal is superior because there are no earnouts, as there would be in CVC's pure buyout, but CVC has argued that its proposals were "neither presented in detail nor discussed" during a special steering committee meeting last week.

Look ahead: The DSV agreement still requires approval of FB's supervisory board and the German government.

• Don't be surprised if both labor and CVC continue pressing their case.

Both Deutsche Bahn and CVC declined comment for this story.