The merger of Karstadt and Kaufhof becomes more likely

New York (dpa) – The owners of Karstadt and Kaufhof have made progress in their discussions on the merger of the two chain stores.

The Canadian owner of Kaufhof The Hudson's Bay Company and the Austrian Karstadt The owner Rene Benko signed on Tuesday a memorandum of understanding, as reported by "Wirtschaftswoche".

He plans to bring Kaufhof, Karstadt and Karstadt Sport into a joint venture. This was confirmed at the German News Agency Wednesday by the bargaining circles.

According to the report of the "Economic Week", the declaration is entitled "Agreement on a merger of equals in the European department store sector". After that, the company Signa de Benko could get a little more than half of the shares of the joint venture and direct the operational business. What impact the merger would have on the employees of both channels, has not yet been clarified exactly. The administration and the purchases should be merged. The closure of large-scale stores was not the subject of debate. Neither HBC nor Signa wanted to answer questions about the case.

Last week, it was announced that the owners of both channels were talking about cooperation again. For years, the owner of Karstadt, Benko, had the idea of ​​integrating the Kaufhof into his department store empire and creating a "Deutsche Warenhaus AG" through the merger of his rivals. But his attempts to take control of Kaufhof have failed several times in recent years. A few months ago, HBC had rejected a bid to buy 3 billion euros from the Austrians for the Kaufhof and a related real estate package.

These two chains have suffered for years from the triumph of low cost suppliers such as Primark or online retailers. The situation has been aggravated by management errors.

The situation is currently particularly critical in Kaufhof. The Cologne – based distribution giant has struggled since the recovery by Canadians at the end of 2015 with sales declines and red numbers. The boss of Kaufhof, Roland Neuwald, is therefore negotiating a reorganization collective agreement with the Verdi union, which is expected to reduce the cost of the company by one million.

But Karstadt has just followed a severe renovation just back to black. For the first time in twelve years, the Group again posted a modest net profit of 1.4 million euros over the past year, despite a slight decline in sales.