Mehdorn said an investor would not have any influence over the company's operational strategy.

The German government has decided to privatise a 24.9 percent stake in Deutsche Bahn's passenger handling, rail cargo and logistics operations in an Initial Public Offering (IPO) that is expected for November. Its rail network and property assets will remain state-owned.

The German rail operator and logistics company is eyeing expansion into Eastern Europe, as it is particularly keen on entering inter-continental container handling between China and Eastern Europe.

Deutsche Bahn and its French peer SNCF jointly run train connections between Paris and several German cities, but are considered competitors in the rail cargo and logistics segments.

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Deutsche Bahn CEO says not against Russian stake

Reuters: Jun 25, 2008

BERLIN -- Deutsche Bahn would not be opposed to its Russian counterpart taking a stake in it when the company is partially privatised later this year, the German rail operator's Chief Executive Hartmut Mehdorn said.

Russian state railway OAO RZhD said last month it planned to buy into Deutsche Bahn when at its initial public offering (IPO), scheduled for November.

"I wouldn't mind if the Russian railway took a stake," Mehdorn told reporters in Berlin on Monday. His remarks were embargoed for publication on Wednesday.

Mehdorn said the two railways were working closely together to build a rail link to China and highlighted the growth potential of eastern markets.

"If they came in it would not scare us," he said.

The sale of a 24.9 percent government stake in Deutsche Bahn, a transport and logistics giant with revenues of 31 billion euros, will be the highlight of the German IPO calendar.

Expected to bring in around 6 billion euros, it would be the country's biggest listing since the government raised 5.8 billion euros with the sale of Deutsche Post (DPWGn.DE: Quote, Profile, Research) shares in November 2000.

Deutsche Bahn finance chief Diethelm Sack said the company was determined to pull of the sale this autumn but acknowledged that market turbulence could affect those plans.

"If the situation is not conducive, we would have to think about a date next year," he said in the briefing. "At the moment, however, we don't think this will be necessary."

Under the terms of the sale, 24.9 percent of Bahn's passenger transport, logistics and services businesses will be sold to investors. The rail tracks, stations and energy supply unit will remain the property of the state.

In selling the company to investors, Sack said Bahn would stress its environment-friendly credentials at a time of rising energy prices and its attractions as a "globalisation" play that is poised to profit from an opening of borders.

Mehdorn said the company would target mainly institutional investors, with a focus on Europe and Asia, although retail investors and Deutsche Bahn employees would also get a piece of the sale.