A day after the German travel and retail giant filed for insolvency, rival retailer Metro said it would buy Arcandor's Karstadt department store chain
Retail giant Metro (MEOG.DE) plans to acquire the Karstadt department store chain from Arcandor (AROG.DE), the German retail and travel group that filed for insolvency on Tuesday after the government refused to bail it out, according to media reports.
Business daily Handelsblatt reported on Wednesday that Metro chief Eckhard Cordes wants to merge Karstadt with Metro's Kaufhof department store chain and then sell the merged company to a foreign investor.
The newspaper cited two investment banks involved as saying Italian entrepreneur Maurizio Borletti is interested in buying a stake in the merged German department store chain.
Borletti told Handelsblatt: "There are discussions at present in which we have taken part. But given the delicate situation I prefer not to comment."
A Metro spokesman declined to confirm the report, saying: "We don't have anything on that." He confirmed however that Metro wants to restructure the Karstadt department stores over a period of one or two years and then plans to sell a majority stake in them, possibly via a stock market flotation.
"We want to buy a strong department store group," Metro chief Cordes told German television on Tuesday night. He said Metro was prepared to pay a "fair price" for the Karstadt stores.
Karstadt has 91 department stores and 28 sports goods stores. It owns Germany's biggest and most prestigious department store, KaDeWe in Berlin. However, Metro isn't interested in all of them. Karstadt stores are a prominent feature in many shopping streets around Germany and there is concern about the impact the insolvency will have on German city centers.
The government refused state aid for Arcandor saying that its main shareholders—the Schickedanz family and private bank Sal. Oppenheim—and creditors weren't willing to contribute enough themselves to a rescue.
Analysts say the decision to let Arcandor fail stemmed partly from the government's realization that state bailouts aren't a vote winner. The center-left Social Democrats, junior coalition partners to Chancellor Angela Merkel's Christian Democrats, had argued in favour of an Arcandor bailout ahead of Sunday's European election but suffered their worst ever result in a nationwide election.
The government won praise from German media commentators on the left and right on Wednesday for refusing to spend taxpayers money on Arcandor, which was in trouble even before the financial crisis and was widely seen as having an outdated business model.
cro—with wire reports