Cross-channel rail tunnel operator Eurotunnel is bidding to buy the French subsidiaries of rail freight operator Veolia Cargo, namely Veolia Cargo France, CFTA Cargo, Veolia Cargo Link and Socorail.

The company is making the bid jointly with state-owned French rail company SNCF, which is bidding for Veolia’s other European operations in Germany, the Netherlands and Italy.

Veolia’s French subsidiaries produced revenues of nearly €50m in 2008, according to Eurotunnel.

The transaction, if it happens, will be the company’s first external growth project.

This decision comes despite Eurotunnel declaring a €8m net loss for the first half of 2009, which the company says is due to a fire that broke out in 2008. Part of the tunnel was closed after the September fire and full capacity was restored only in February 2009.

The company says it stands to make a profit if it gets total insurance payments, reports Reuters.