TORONTO, Canada — Hudson’s Bay Co., the oldest company in Canada, has won the bidding for Metro AG’s Galeria Kaufhof department-store chain in Germany, according to people familiar with the matter.
Hudson’s Bay and Metro plan to announce an agreement as early as Monday for a transaction value of about 2.9 billion euros ($3.3 billion), according to the people, who asked not to be identified because talks are private. Metro’s supervisory board unanimously approved the sale late Sunday, one of the people said.
The purchase would give Toronto-based Hudson’s Bay, 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 department-store chain after almost two decades together amid rising online competition and gain more leeway to keep modernizing stores and investing in e-commerce capabilities.
Hudson’s Bay beat out Vienna-based Signa Retail, controlled by Austrian property developer Rene Benko, who also owns Kaufhof competitor Karstadt, the people said. The Canadian firm’s mostly cash bid was deemed a better offer because it included labor- related concessions, a more-solid financing structure and plans to grow and invest, said the people. A merger of Kaufhof and Karstadt, on the other hand, may have led to more job losses over time, one of the people said.
A spokesman for Dusseldorf, Germany-based Metro declined to comment. A spokeswoman for Hudson’s Bay couldn’t be immediately reached for comment outside of regular business hours.
Jettisoning Kaufhof may help Metro Chief Executive Officer Olaf Koch improve his company’s performance. Metro’s shares have fallen 28 percent over the past five years to about 31 euros, compared with a 143 percent increase in Germany’s 50-stock MDAX index of middle market capitalization companies. Hudson’s Bay shares gained 5.2 percent on Friday to C$24.
Galeria Kaufhof was founded in 1879, and its 135 stores in Germany and Belgium occupy prime real estate in city centers. 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.
By Ed Hammond, Aaron Kirchfeld, Aaron Ricadela; with assistance from Scott Deveau, Paul Jarvis, Lindsey Rupp. Editors: Kevin Miller, Bruce Rule.