HBC wins bid for German chain Kaufhof
Faces Amazon, international competitors
Hudson’s Bay Co., the oldest company in Canada, has won the bidding for Metro AG’s Galeria Kaufhof departmentstore chain in Germany, according to people familiar with the matter.
HBC and Metro plan to announce an agreement as early as Monday for a purchase price of about 2.9 billion euros ($4 billion), according to the people, who asked not to be identified because talks are private. Metro’s supervisory board is expected to sign off on the deal on Sunday, though a decision could be delayed, one of the people said.
The purchase would give Toronto-based HBC, which also owns the Saks Fifth Avenue and Lord & Taylor clothing stores, control of a business that has been a stalwart of German shopping districts for about 135 years. By selling Kaufhof, Metro will part with the struggling departmentstore chain after almost two decades together and gain more leeway to keep modernizing stores and investing in e-commerce capabilities to make Metro more competitive.
Hudson’s Bay beat out Vienna-based Signa Retail, controlled by the Austrian property developer Rene Benko, who also owns Kaufhof competitor Karstadt, the people said. The Canadians offered a higher price, more solid financing structure and plans to grow and invest, said the people.
A merger of Kaufhof and Karstadt, on the other hand, would have led to more job losses, one of the people said.
A spokesman for Duesseldorf-based Metro declined to comment. A spokeswoman for Hudson’s Bay couldn’t be immediately reached for comment outside of regular business hours.
Galeria Kaufhof was founded in 1879, and its 135 stores in Germany and Belgium occupy prime real estate in city centres. The chain, which was part of the merger that created Metro in 1996, employs more than 21,100 people, according to its website. Sales last year were 3.1 billion euros and earnings before interest and taxes were 193 million euros.
Kaufhof and Karstadt have dominated German department-store retailing for more than a century. The chains have struggled to adapt to new competitors including Amazon.com Inc. as shoppers seek more international brands in an increasingly crowded market.