DB to take over Arriva

[whole diary]

[Chris from Nailsea]

As the initial speculation on this subject has now become fact, I've taken the opportunity to give this topic a wider profile, by moving it from 'South Wales local journeys' and merging other related posts from the 'Cross Country destruction of service' topic - in the interests of continuity and completeness.

Chris. 

[welshman]

Now we can have a direct service from Aberystwyth to Marylebone without W&S^▸ (Wrexham and Shropshire (Open Access Operator)) whingeing.

If it's any help, the Welsh for Germany is "Yr Almaen" and for German is "Almaeneg".

Bahn being railway more or less, the Welsh is rhelffordd.

Rhelffordd Almaeneg Cymru?

Trenau Almaeneg Cymru?

I suspect we'll just have DB^» (Deutsche Bahn - German State Railway - about) Cymru. 

[Chris from Nailsea]

From the Guardian:

Transport market is becoming a demolition derby

Arriva's takeover by Deutsche Bahn raises the question of how much the public will gain from consolidation in the sector

So this is how liberalisation of the European ^200bn (^173bn) transport market will work. The field will be reduced to half a dozen players; the process will take 10 years; the state-owned giants will lead the mopping-up operation. This vision was outlined yesterday by R^diger Grube, chief executive of Deutsche Bahn, as he unveiled an agreed ^1.6bn takeover of Arriva. It is depressing.

Almost alone among the UK^▸ (United Kingdom) transport groups, Arriva made the wise decision in the mid-1990s to concentrate its overseas expansion solely on smallish deals in continental Europe. The process was "painstaking," says chief executive David Martin, but few doubt its success. Arriva operates in 12 countries, has been winning contracts by the bucketload and rewarded its shareholders with unbroken dividend growth.

In a rational world, liberalisation would encourage the likes of Arriva to continue to exert competitive pressure on state-owned titans. Arriva recently won a high-profile route into Berlin. Did this embarrassing loss prompt Deutsche Bahn to pounce?

The German anti-cartel regulators recognise the threat to local competition and will force Deutsche Bahn to divest Arriva's German trains business. This ruling is not a deal-breaker, explained Grube. You bet it's not: he is buying a company that was becoming a serious irritant in other parts of Europe.

Both sides made play of the fact that Deutsche Bahn is a "normal" company in the sense that is structured as a joint stock company. Come on, all the stock is the hands of the German state, which is not open to offers even if it mutters occasionally about a flotation. The principle of reciprocity is being ignored.

Will the lot of the poor old passenger be improved? Arriva, under the wing of a big brother, may be able buy trains more cheaply and pass on the benefits. But, once Grube's vision is realised, we may also regret the loss of competition and variety.

Naturally, few are complaining today. German trains are meant to be impressive. Arriva's shareholders can celebrate a 50% takeover premium. The UK government can trust Deutsche Bahn's commitment to Arriva's base in Sunderland ^ this is not a Kraft/Cadbury. In a decade's time, however, we may wonder why anybody thought the cause of liberalisation was advanced by encouraging successful private companies to sell themselves to state-owned corporations.

[RailCornwall]

Welshman ...

DB^» (Deutsche Bahn - German State Railway - about) committed to retaining the Arriva brand outside of Germany, I presume if there's no German forced divestment the Arriva operations will be merged back into DB's home operations.

[Chris from Nailsea]

From the Daily Mail:

German rail group in ^1.6bn takeover of British bus and rail firm Arriva in ^1.6bn deal

Germany's state-owned rail company is to takeover Britain's trains in an attempt to get them to run on time.
In a blow for the nation which invented the railways, Deutsche Bahn has agreed a ^1.59billion deal to take over the UK^▸ (United Kingdom)'s second-biggest bus and rail firm Arriva.
The deal marks yet another loss to foreign ownership of key elements of Britain's manufacturing or infrastructure heritage.
The takeover of Arriva is the latest step by DB^» (Deutsche Bahn - German State Railway - about) to exploit liberalised European transport markets to grow quickly in size through acquisitions. But the move was condemned by furious unions yesterday.
The giant Rail Maritime and Transport (RMT^▸ (National Union of Rail, Maritime & Transport Workers)) union said it would be seeking urgent meetings with the new owners.
The RMT said DB had 'slashed its workforce by half ' since moves to privatise it began in 1994 and was 'aggressively raising capital'  for acquisitions in the EU^» (European Union - about).
DB carries five million train passengers a day in Germany and operates in more than 130 countries with even more foreign take-overs planned.
Already among Britain's transport 'crown jewels' under German ownership are Britain's Rolls-Royce and MINI, which belong to BMW, as well as Bentley by Volkswagen.
Many more are under wider foreign ownership, such as Jaguar Land Rover which is owned by India's TATA, and airport operator BAA which is owned by Spain's Ferovial.
Rapidly expanding Deutsche Bahn already has a toe-hold presence in the UK - running services such as the Chiltern Railways route between London and Birmingham Snow Hill.
It owns the company which runs the Royal Train and recently also won the contract to operate the Tyneside Metro running in Newcastle and Gateshead.
In comparison, Arriva grew from modest roots as a family motorcycle firm founded more than 70 years ago in Sunderland.
It currently runs CrossCountry and Welsh rail services, as well as having a 20per cent stake in London buses and many businesses across Europe.
Gerry Doherty, leader of the TSSA^» (Transport Salaried Staffs' Association - about) rail union, said: 'If Germany believes railways should be run by the state in favour of the passenger, why don't we do the same here in Britain.
'Ministers are quite happy to see German state owned railways take over our badly run privately owned companies without  drawing the blinding obvious correct lesson.
'France, Italy and Spain also run their own railways rather than allow passengers to be ripped off by private profit seekers.'
Bob Crow, RMT general secretary, added: 'This is a huge step in the wrong direction for rail workers and passengers and should sound a warning that we are heading towards a dangerous monopoly of rail and bus services across Europe in which profit comes ahead of safety and service.'
'The accelerating pace of acquistions across Europe will be bad news all round as DB seeks to squeeze both its passengers and its workforce.'
Deutsche Bahn chief executive Rudiger Grube said that the Arriva brand was 'very, very valuable' and would be kept outside Germany.
The company will also maintain Arriva's current headquarters in Sunderland - ironically just a few miles from the world's  very first railway between Stockton and  Darlington, as well as Stephenson's own home at Wylan in Northumberland.
Mr Grube said job losses were unlikely as a result of the move: 'This is a merger for growth, sustainability and profitability so I hope we will create workforce rather than reduce workforce.'
The company is confident of getting the deal approved by European competition authorities, although some of Arriva's German business will have to be sold.

[Adrian the Rock]

...The deal marks yet another loss to foreign ownership of key elements of Britain's manufacturing or infrastructure heritage.

Hate to say it, but we just don't seem to be much good at managing anything other than trading-type businesses in this country.  (NB for avoidance of doubt, this remark is aimed specifically at senior managements and the modern-day transatlantic business school culture (and not just in the rail sector) - not middle managers or staff on the ground.

I hope this may gradually change, now the banking crisis has happened, but I doubt it'll be overnight.

The other point most media reporters and analysts tend to forget is that long-term trade deficits (ie balance of payments - not budget) = need to make and sell family silverware.  This is the real underlying reason so many of our businesses get taken over by foreign companies.

In the meantime, I don't think DB^» (Deutsche Bahn - German State Railway - about) have done too bad a job at Chiltern/WS&MR^▸ (Midland Railway).  If they can get some Evergreens to take root in Wales that would be great.

[JayMac]

Germany's state-owned rail company is to takeover Britain's trains in an attempt to get them to run on time.

What a truly terrible opening line to the story. Phrased like it was the only reason DB^» (Deutsche Bahn - German State Railway - about) are taking over Arriva. In fact I bet that ATW^▸ (Arriva Trains Wales (former TOC^▸ (Train Operating Company))) and XC^▸ (Cross Country Trains (franchise))'s Public Performance Measure had absolutely no bearing whatsoever for the takeover.

Dead tree press journalism? Don't ya just love it!   



EDIT: OK, fair enough. The bit about '...an attempt to get them to run on time' has been removed from the story at the last update at 1:12AM. And it's no longer '...a blow for the nation which invented the railways', that bit's been re-written as well.  Less bombastic sub-editor perhaps?

The unions are still 'furious' though!

[Chris from Nailsea]

An interesting additional item has now appeared in that Daily Mail article:

Passengers will have to pay the price

Almost two decades after the privatisation of British Rail, a large chunk of the country's transport network is back in state hands. The new owner of Britain's biggest rail franchise and a large number of the nation's big city bus networks will be the wholly state-owned German rail operator Deutsche Bahn.
The successor company to Deutsche Reichsbahn, which ran the trains to Germany's Second World War death camps, won control of Sunderland-based transport group Arriva after a ^1.6billion bid.
The Arriva board, headed by former HM Customs & Excise chairman Sir Richard Broadbent, capitulated.
The Deutsche Bahn bid has triumphed despite Lord Mandelson's promise of a 'Cadbury law' designed to toughen the scrutiny of takeovers to determine if they are in the 'public interest' and make it harder for foreign predators to snatch control of Britain's best companies.
Arriva, which is in charge of the Cross-Country franchise which runs from Aberdeen to Penzance as well as Arriva Trains Wales, is widely regarded as Britain's most efficient transport operator. It has been a pioneer in Europe, which produces 42 per cent of its profits and revenues.
If nodded through by regulators in the UK^▸ (United Kingdom) and Germany it will be another blow to Britain's efforts to lead a free market revolution across Europe.
A series of overseas bids for power and transport companies has shifted control of the privatised enterprises back into European state hands and made a mockery of the competitive model. The domination of the nation's energy supplies by Continental giants such as France's state-controlled Electricite de France and Germany's E.On has left Britain's energy regulator Ofgem fuming over the lack of competition. It is conditions in Europe, rather than an open auction, which set our energy bills.
The German boss of Deutsche Bahn, Ruediger Grube, left no doubt who would be charge of the Arriva companies post the deal. 'We intend to be the drivers not the driven,' he declared. His comments were intended to relieve the anxiety of German politicians who have argued that the state-owned railway may be paying too high a price.
While the bid may be good news for Arriva shareholders (who receive 775p in cash for each share), it is hardly likely to be in the best interests of British rail and bus passengers.
German domestic investment is almost certainly likely to be a higher priority than running the bus networks in Liverpool, Leeds, Leicester, Glasgow and Newcastle.
London faces the unhappy prospect of 20 per cent of the buses potentially carrying the Deutsche Bahn livery.
There will also be some disquiet at the rather unfortunate history of Deutsche Bahn when it comes to confronting its past.
In 2006 the company found itself in major disagreement with the German federal government when it refused to allow an exhibition of Nazi deportations to be shown at stations across the country. Eventually the firm gave in to public pressure.
Until recently the Labour government had refused to become involved in overseas takeovers of British firms, allowing large swathes of industry, from Pilkington Glass to ICI and Hanson, to fall into foreign hands.
By making its offer now, under the deep cover of an election campaign, Deutsche Bahn will be counting on pre-empting any changes in the law.

[JayMac]

The second article mentions the prospect of 20% of London buses carrying the DB^» (Deutsche Bahn - German State Railway - about) livery.

Which kinda contradicts the first story's quote from DB CEO^▸ (Chief Executive Officer) Rudiger Grube saying, "the Arriva brand was 'very, very valuable' and would be kept outside Germany."

Even if they didn't keep the Arriva brand, London buses wouldn't carry DB livery, just discreet logos.

And what point is served by mentioning Deutsche Reichsbahn running the trains to concentration camps in the second world war - save for stirring up anti-German feeling?

[matt473]

The second article mentions the prospect of 20% of London buses carrying the DB^» (Deutsche Bahn - German State Railway - about) livery.

So that'll DB repainting the London bus fleet to, err, red then I guess. 

[welshman]

And what point is served by mentioning Deutsche Reichsbahn running the trains to concentration camps in the second world war - save for stirring up anti-German feeling?

Exactly so.  "Capitulated", "foreign predators", "unfortunate history".  Stand by your beds, gentleman.  We face defeat.  Presumably Arriva's acquisition of interests elsewhere in Europe did not make it a foreign predator etc etc.    Are its British employees in Europe to be evacuated by small boat?

[inspector_blakey]

Presumably a take-over by SNCF^▸ (Societe Nationale des Chemins de fer Francais - French National Railways) would not have mentioned the French state railways' complicity in the Nazis' "Final Solution" - to bring it up in the context of DB^» (Deutsche Bahn - German State Railway - about) really is a ridiculously low blow even for the Daily Hate.

[John R]

I'm told DB^» (Deutsche Bahn - German State Railway - about) Cross Country will be getting rid of the electronic seat reservations, and changing to a traditional method of putting a towel on each reserved seat, two hours before it is due to be occupied. 

[inspector_blakey]

Sorry John, someone's already beaten you to it!

[JayMac]

"Ve haff vays of taking your TOCs^▸ (Train Operating Company)"