*

All-cash deal to be financed through equity raising and

debt

*

Transaction expected to close in second quarter of next

year

*

DSV pledges 1 billion euro investment in Germany

(Writes through, adding detail and share price reaction in

paragraphs 3,5,7,8)

By Stine Jacobsen, Jacob Gronholt-Pedersen and Rachel More

COPENHAGEN/BERLIN, Sept 13 (Reuters) - Denmark's DSV

has agreed to buy Schenker, the logistics arm of German

state rail operator Deutsche Bahn, for 14.3 billion euros

($15.85 billion) in a deal that would make it the world's

biggest logistics company.

The acquisition will be the biggest by a Danish company and

propel DSV above Swiss group Kuehne und Nagel in both

volume and revenue.

The all-cash transaction will be financed through a

combination of an equity raising of 4-5 billion euros and debt

financing, DSV said.

DSV, which started as a small enterprise of 10 truckers in

1976, said the commercial and operational fit between the two

groups will contribute to growth, job creation and strong

financial returns.

Shares in DSV were up 4% by 0701 GMT, extending recent gains

triggered by reports that a deal was imminent.

"The acquisition of Schenker is a transformative transaction

for DSV, creating a world-leading player within the global

transport and logistics industry," DSV said in a statement.

Reuters reported on Wednesday that the Danish group had won

the race to buy Schenker, citing Deutsche Bahn and German

government sources.

PLEDGES ADDITIONAL INVESTMENT

As part of the deal, DSV has pledged to invest 1 billion

euros in Germany over the next 3-5 years and keep several key

jobs in the country. The combined group will have more employees

in Germany five years from now than Schenker and DSV have today,

the Danish company said.

The deal, subject to regulatory and German ministerial

approval as well as by Deutsche Bahn's supervisory board, is

expected to close in the second quarter of next year.

The combined group will have revenue of 293 billion Danish

crowns ($43.52 billion) based on 2023 results, with a workforce

of about 147,000 across more than 90 countries, DSV added.

"(It) marks the largest transaction in DB's history ... It

has been important for us to find a strong partner for Schenker

and a long-term home for the employees of the company," Deutsche

Bahn CEO Richard Lutz said in the statement.

DSV has grown rapidly through a string of successful

acquisitions - some larger than the company itself - in a highly

fragmented logistics market.

Schenker, which has been Deutsche Bahn Group's biggest

profit driver in recent years, has more than 70,000 employees in

about 130 countries, including roughly 15,000 in Germany.

($1 = 0.9022 euros)

($1 = 6.7329 Danish crowns)