Germany delays rail flotation in stock turmoil
Deutsche Bahn, Germany's giant railways company, on Thursday announced it would postpone its partial privatization of its passenger and goods operations until after the stock market settles, dpa reported.
The state-owned group had planned to offer for sale just under a quarter of its DB Mobility Logistics division on October 27 in what is likely to be Germany's last major privatization of state-owned industry.
Days of plunging prices on markets around the world have caused various companies to rethink plans to sell new equity.
The Finance Ministry, which holds the federal government's stock portfolio, and Deutsche Bahn said in a joint statement that the delay was because of the "extreme insecurity on financial markets and the need to obtain a fair price."
Deutsche Bahn is to revive the plans to sell 24.9 per cent of DB Mobility Logistics in a "more favourable market" and said it would continue its "dialogue" with potential investors.
Mobility is the DB term for passenger operations and Logistics refers to cargo operations.
Deutsche Bahn tracks and stations are to remain in government ownership. The company operates bullet trains fast enough to compete with the airlines, but also run-down suburban trains.
Bahn had hoped to raise 4 billion (5.45 billion dollars) to 5 billion euros from the sale, with part of the funds earmarked to help the federal budget. However, most would have been ploughed back into the company.
On Wednesday, a German manufacturer of solar panels, Schott Solar, called off a flotation this week for the same reason.
Critics of the Bahn privatization plan cheered the cancellation and called for the share flotation to be called off completely. They have said the railways are a public service that should remain state- run.