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DB Extends Reach

DW staff/dpa (jp)June 29, 2007

German railway giant Deutsche Bahn AG has stepped up its global expansion by confirming the purchase of two key European freight companies.

DB is fast expanding its European networkImage: AP

This week saw the supervisory board of Europe's biggest rail company give the green light to buy Britain's biggest rail freight operator English Welsh and Scottish Railway (EWS) and Spain's Transfesa, which specializes in transporting cars.

While the cost of the two purchases has not been released, the moves came in the wake of Deutsche Bahn's announcement last week that it had sold its stake in the Danish-German shipping firm Scandlines to a group of investors.

The sale of the Scandlines stake is expected to generate about 780 million euros ($1.05 billion) for Deutsche Bahn.

Allegedly, it is now setting its cap at further acquisitions in France and Hungary.

Building up the business

Die Deutsche Bahn geht an die Börse
On trackImage: AP

The new purchases also follow last week's announcement by Deutsche Bahn that it had forged a deal with Russian rail company RZD as part of a push by the German rail group to build up its freight business in Asia and Eastern Europe.

The two companies will form a joint venture on logistics that will focus on transporting containers from Europe to Russia and CIS states, the company said in a statement.

Deutsche Bahn's international business drive comes as the company gears up for its part privatization.

While the German Parliament wants the rail operator to make its stock market debut by the end of 2009, Deutsche Bahn is hoping to list on the stock market by the middle of 2008.

Mehdorn to stay on

Bahnchef Hartmut Mehdorn
Hartmut Mehdorn is still in the driving seatImage: dpa

The Deutsche Bahn board also agreed Wednesday to extend the contract for chief executive Hartmut Mehdorn for three further years to May 2011.

64-year-old Mehdorn was appointed Deutsche Bahn chief in 1999.

With EWS having an annual turnover of 700 million euros and Transfesa chalking 290 million euros in revenue, the two purchases are likely to help to boost the Deutsche Bahn balance sheet as it prepares for privatization.