Germany’s Karstadt and Galeria Kaufhof Department Stores Near Merger

BERLIN — The fusion of Germany’s two department store chains, Karstadt and Galeria Kaufhof, may be nearing reality.
According to a report in the German business weekly WirtschaftsWoche today, a 200-page letter of intent has been signed by René Benko’s Vienna-based Signa Group, owner of Karstadt, and Hudson’s Bay Co., owner of the Galeria Kaufhof chain. Neither party would comment on the report.
WirtschaftsWoche said the document calls for a joint venture between Kaufhof, Karstadt and Karstadt Sport. Signa would have a stake of slightly more than 50 percent in the new venture and take over management of the operative business, as well as 50 percent of the 41 Kaufhof properties currently held by HBC.
Reports say the real estate interests alone carry a price tag of more than 800 million euros, and that the agreement includes an additional 100 million euro payment by Signa to HBC.
The fusion encompasses 180 department and sports store doors. Although Kaufhof and Karstadt often have neighboring stores in Germany, a widespread door closure is not envisioned. A maximum of 15 poorly performing doors could be shuttered, the reports say.
Moreover, administration and buying are to be consolidated, and the Karstadt headquarters in Essen are likely to be closed.

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