The Czech government is considering merging Czech rail cargo unit CD Cargo with its much larger Polish counterpart PKP Cargo in the most ambitious central European railway deal ever, daily Mlada Fronta Dnes reported.

A Czech-Polish task force has been formed to study the possibility of merging the two loss-making companies, the daily said, quoting Czech Deputy Transport Minister Jakub Hodinar.

The paper added the Polish Transport Minister should arrive in Prague during January to discuss details of the deal.

PKP Cargo is up for sale and the paper said the Czechs were ready to buy it although, for "tactical reasons", they were calling the planned transaction a strategic merger.

The value of the deal was estimated in the order of billions of crowns, the paper said, quoting sources familiar with the plan.

CD Cargo has debts of roughly 8 billion crowns ($428 million), according to the daily. PKP Cargo, whose revenue is about twice that of CD Cargo, made a loss of more than $160.5 million last year, the paper added. (Reuters)