HBC in joint-venture talks with European retailer Signa Holding

Hudson’s Bay Co. is eyeing a joint venture in Europe with an Austrian department store heavyweight it previously rebuffed.

The Canadian retailer said it is in talks with Signa Holding GmbH, a European company that made an unsolicited bid late last year for HBC’s German operations, but withdrew the offer earlier this year after it was rejected by the HBC board because it undervalued the business.

A statement HBC released Friday said the pair recently signed a non-binding letter of intent “with respect to the exploration of a potential joint venture.”

But it noted that “there can be no assurance that any such discussions will ultimately lead to a transaction” and that any deal would still be subject to board approval and third-party consents that are out of HBC’s control. Signa owns Kardstadt, a department store that sells everything from apparel to household appliances, while HBC runs similar businesses overseas called Galeria Kaufhof and Galeria INNO. A potential deal between the two could pave the way for a German department store monopoly and signals that HBC still sees value in Kaufhof, despite its European operations seeing a 6.6. per cent decrease in overall comparable sales in the last quarter. HBC scooped up Kaufhof from German retailer Metro AG in 2015 for 3 billion euros ($4.5 billion).