Deutsche Bahn in Talks to Acquire Arriva PLC (LSE:ARI)

Word is out that Arriva PLC (LSE:ARI) is in talks to be acquired by Deutsche Bahn for a reported $2.5 billion, according to a statement released on the Arriva web site. Arriva is an operator of bus and rail based in the U.K.

Operatons of the transport services offered by Arriva extend into 11 countries in the European Union, in addition to Britain itself.

Terms of the deal are a cash offer of 775 pence a share from Deutsche Bahn AG for Arriva, along with a dividend of 18.8 pence a share for Arriva sharholders.

Arriva states the discussions are at an advanced stage, and seems to be at the point of being offered to shareholders for approval, once the boards of each company approve of it.

The German government is another step along the way for final approval, as they must give the nod for the deal to go forward. Deutsche Bahn is owned by the German government.

Morgan Stanley's (NYSE:MS) take on the deal is there will probably be a need to increase the offer to as high as 860 pence a share for Arriva investors to approve of the sale. 
 
Deutsche Bahn AG reportedly been performing due diligence over the last month in preparation to make an offer.

Arriva is mostly recognized through its operating of Cross-Country rail in the UK, while Deutsche Bahn is widely know for its ownership of Chiltern Railways.

Driving the interest of Deutsche Bahn in Arriva is the expansion of the company across the European region.