The auction of Laing Rail has concluded with Deutsche Bahn agreeing to pay fund manager Henderson a very full price for the business, so securing German state railways' long-time ambition of entering the UK passenger rail market.

The company saw off competition from second place bidder NedRailways, while Arriva and EurailCo, the Transdev/RATP joint venture, made up the final four competitors.

The eventual sale price of around £130m was considerably higher than the value placed on the business by City banks. Financiers familiar with the sale said £95-105m represented the correct market value.

The deal gives DB the Chiltern Railways franchise, due to expire in 2021, a 50% share in the new London Rail Concession, and a 50% share in open access operator Wrexham and Shropshire. It also includes Chiltern's Warwick Parkway station and new Wembley depot which accounted for a significant proportion of the purchase price.

The Laing Rail companies will now be integrated into the DB Regio division, which runs local and regional services in Germany plus small operations in Poland and Sweden. The existing UK management teams headed by Adrian Shooter at Chiltern, Steve Murphy at Overground and Andy Hamilton at WSMR will remain in place.

The acquisition increases DB's stake in the UK rail industry following the purchase of freight operator EWS last year and the company immediately indicated that expansion was on the agenda.

"This gives us great scope for further growth in the UK rail market. We intend to enter into a long-term commitment in the United Kingdom and make continuous investments in the quality of our services," Ulrich Homburg, chairman of the DB Regio management board, commented.

Initially though, Homburg stressed that the transfer of Laing Rail to DB ownership would be low key. He said UK staff would regularly attend best practice sharing sessions with DB staff, but there were no immediate plans to introduce new working practices.

Nor would there be any changes to liveries, and investment programmes would continue as scheduled, including Chiltern's development of m-ticketing, and fleet refurbishment and expansion programmes. For the longer term, DB's briefings only chose to highlight that "exchange of best pricing practices between the two companies could be of benefit to passengers in both countries".

Prior to the purchase of Laing Rail, DB had been eyeing the UK passenger market for years. But despite being the largest train operator in Europe, carrying 1.9 billion passengers per year, it had taken a far more low key approach than other state-owned companies.

DB considered bidding for a number of contracts in the first round of refranchising, and pre-qualified to bid for the East Coast franchise in 2004 in a joint venture with Stagecoach and Virgin. However, it pulled out claiming the risks were too great.

Karl-Friedrich Rausch, chairman of DB's Passenger Transport Division said the financial risks of the Laing deal were easier to understand because of the higher quality information available during a purchase as opposed to a franchise bid.

With Laing secured, he added that DB would be in a stronger position to bid for UK franchises and also expand more rapidly into other European countries. "We will now be operating large-scale passenger transport outside of Germany," Rausch commented. "It will allow us to substantially strengthen our position in the European market."

Meanwhile, defeated bidder NedRailways indicated that it believed it had put in a high quality bid for Laing Rail. "Our expansion plans are built on our already excellent track record in the UK with Merseyrail and Northern Rail, and the huge scope of industry knowledge available through our parent company in the Netherlands," NedRailways chief executive Anton Valk said.

"Strong financial backing and a clear vision from our Board were the crucial elements to NedRailways reaching the last two in the competition for Laing."

UK managing director Dominic Booth added that a full team supported by advisors and analysts had been ready to work on the deal the minute Henderson put Laing Rail up for sale.