French state railway SNCF’s board of directors has given its approval to enter exclusive talks with a consortium comprising Caisse de dépôt et placement du Québec (CDPQ) and a fund managed by DWS Group (DWS) for the sale of its railcar subsidiary Ermewa Holding.
The board gave its approval after a competitive auction process.
Reuters reported citing a source that SCNF plans to sell Ermewa for $3.62bn (€3bn).
Following the conclusion of the customary consultation with employee representative bodies within the SNCF Group and Ermewa, the consortium’s offer could lead to a definitive agreement.
The completion of the deal is subject to the approval of competition authorities, including the European Commission.
After completion of the transaction, CDPQ and DWS will hold equal shares in Ermewa.
SNCF chairman and CEO Jean-Pierre Farandou said: “The planned sale of Ermewa is fully in line with the SNCF group’s strategy to become a world leader in sustainable mobility for passengers and goods, with a core rail business and two strategic assets, Keolis and Geodis.
“This operation would also accelerate the group’s debt reduction and pursue the objective of maintaining its financial trajectory while backing Ermewa with long-term partners, able to ensure the sustainability of the company’s activity, which would remain a commercial partner of SNCF.”
CDPQ executive vice-president and infrastructure head Emmanuel Jaclot said: “CDPQ is thrilled by the opportunity to invest in Ermewa, a French and European leader that is ideally positioned to leverage existing trends, including the development of rail freight and the decarbonisation of goods transportation, which are aligned with our portfolio’s carbon-intensity reduction targets.”
Ermewa president David Zindo-Imbault said: “I am particularly proud to open a new chapter in the history of the Ermewa Group with CDPQ and DWS. The Ermewa Group’s ambition is to provide safe, efficient, and innovative equipment to its customers and to contribute to decarbonising transport flows. The investment capacity and long-term involvement of CDPQ and DWS would reinforce this ambition and allow us to envisage strong growth for the years to come.”
A provider of industrial railcars and tank container leasing services, Ermewa Group recorded revenues of around $591m (€489m) last year.
It provides industrial railcars and tank containers leasing services, as well as has operations in 80 countries.
Proceeds from the divestment are expected to help the state-owned firm improve its finances, which have been badly impacted by the decline in traffic due to the Covid-19 pandemic.