Signa Holding, the Austrian property and retail group that owns German retail chain Karstadt, has inked a deal which will allow it to take control of the Galeria Kaufhof real estate and operating business and merge it with its Karstadt business.
As part of the agreement, Signa and Galeria Kaufhof owner Hudson's Bay Co (HBC) will form a joint venture which will include Galeria Kaufhof, Karstadt Warenhaus, the entire retail business of HBC Europe (Saks OFF 5TH, Galeria Inno in Belgium, Hudson’s Bay in the Netherlands), as well as Karstadt Sports and the entire food and catering departments of both companies (Dinea, Galeria Gourmet, Karstadt Feinkost, Le Buffet).
The new platform, which will be 50.01% owned by Signa Retail and 49.99% by HBC, will have a total of 243 city-centre locations in Europe and employ a total of 32,000 staff. The newly formed retail group will be led by Stephan Fanderl, current CEO of Karstadt & Signa Retail, and will include representatives from Galeria Kaufhof and Karstadt.
Under the partnership, Signa will also acquire a 50% equity interest in HBC’s European real estate holdings. These assets will include 39 properties owned by HBC’s existing joint venture in Europe and 18 additional properties held at Galeria Kaufhof. HBC will continue to hold 50% of the real estate assets.
Closing of the transaction is subject to approval from the antitrust authorities.
'Best structure'
Canada-based HBC first confirmed in early July that it was in negotiations with Austria’s Signa Holding over a potential joint venture for its European business.
HBC bought Kaufhof in 2015 for €2.8 bn from German retailer Metro. Earlier this year it rejected Signa’s €3 bn offer for Kaufhof.
'This partnership is a smart, strategically sound opportunity to equip both companies with the capabilities to strengthen operations and overcome the challenges in the German retail market,' said Helena Foulkes, CEO of HBC. 'We believe it is the best structure for customers, HBC, our associates/employees and the city-centres where we operate. Together, we will focus on seizing opportunities in the market, evolving the business model, and adapting it to meet changing consumer needs.'
Stephan Fanderl, CEO of Karstadt Warenhaus and managing director of Signa Retail added: 'With this joint venture, two iconic companies have found an ideal solution to position themselves for success in the highly competitive German and European retail market. We are now entering a phase of hard work, major operational challenges and demanding market changes.'