Deutsche Bahn delays plans to float international railway group Arriva - sources

By Markus Wacket

BERLIN (Reuters) - German state-owned rail operator Deutsche Bahn [DBN.UL] is delaying plans for an initial public offering (IPO) of its international passenger transport business Arriva, company sources said.

The flotation, which had been planned for the first half of the year, will not take place yet, one of the sources said after a supervisory board meeting late on Wednesday, adding that executing a deal before year end was also seen as challenging.

A Deutsche Bahn spokeswoman declined to comment.

Deutsche Bahn Chief Executive Richard Lutz had said in December that the float of a minority stake in Arriva would be launched in May, with a view to selling the rest of the shares over three years.

Deutsche Bahn, which talked about an IPO as long ago as 2016 to help reduce debts, had earlier sought an outright sale. But sources said U.S. buyout group Carlyle <CG.O> and others failed to present bids that met expectations.

Arriva, which employs more than 50,000 people across Europe and generates 5 billion euros ($5.4 billion) in sales, runs British rail franchises as well as buses around the country. But it recently lost its license for the Northern Rail network in northern England and sources said Brexit uncertainty had scared off potential investors.

Deutsche Bahn's supervisory board also stepped short of making a decision on plans to sell and lease back locomotives and wagons of ailing freight division DB Cargo, the sources said.

Lutz, who has been CEO since 2017, faces pressure to turn around the operational and financial performance of the deeply indebted rail operator.

(Reporting by Markus Wacket; Writing by Arno Schuetze; Editing by David Holmes)