SNCF eyes Italian freight stake

France’s state railway is considering taking a significant stake in one of Italy’s most important rail freight operators in the latest example of national railways’ determination to expand abroad.

SNCF’s potential purchase of up to 49 per cent of Ferrovie Nord Cargo, the freight arm of Ferrovie Nord Milano, continues a string of acquisitions by the French company since Guillaume Pépy took over as president in February. The company is looking at other potential purchases, including the privatisation of CFR Marfa, the freight arm of Romania’s national railways, according to a person familiar with SNCF’s thinking.

A senior executive involved said SNCF was carrying out due diligence investigations before a deal but nothing was yet finalised. FNM officially insisted the sale process to find a minority partner to develop the business remained in progress. “Within the summer we will choose the partner,” it said.

Ferrovie Nord Milano, controlled by the region of Lombardy but listed on the Milan Stock Exchange, is Italy’s second-biggest train operator after state-owned Trenitalia. It owns about 300km of track and operates local passenger services, including the shuttle between Milan and the city’s Malpensa airport.

The freight arm has competed strongly with established operators as part of the international European Bulls alliance of private rail freight operators formed to combat the growing market strength of Germany’s Deutsche Bahn.

SNCF’s strategy resembles that of Deutsche Bahn, which has grown aggressively by buying the freight arms of state railways in the Netherlands and Denmark, buying or taking stakes in operators elsewhere and taking over Schenker, the logistics company.

In April, SNCF said it was buying 75 per cent of ITL, a German private railfreight operator, just as it announced offer for Geodis, the French logistics company, valuing its equity at €1.1bn ($1.7bn).

A stake in Ferrovie Nord Cargo would be of more strategic than financial importance for SNCF, taking it into one of Europe’s most important markets. The market is dominated by Trenitalia and companies owned or partly owned by Deutsche Bahn and SBB, the Swiss state railways.

Ferrovie Nord Cargo accounted for only €33.5m of FNM’s €308m turnover in 2006, the last year for which it has published full figures, and it lost €207,000. A deal is likely to value the business ata few tens of millions of euros. A person familiar with SNCF’s thinking said no deal was likely before June, when the Geodis transaction should conclude.