Watch out Europe. The German department store sector now has a big slice of Canadian influence. After a months of speculation Hudson’s Bay Corp …
Watch out Europe. The German department store sector now has a big slice of Canadian influence.
After a months of speculation Hudson’s Bay Corp (HBC) has agreed to pay Metro AG €2.82bn ($3.17bn) to buy the Galeria Kaufhof chain, the Galeria Inno stores in Belgium, plus their respective real estate portfolio.
HBC said the purchase creates a global platform, positioning HBC for future growth in Europe. The deal is expected to close at the end of September.
Specifically, HBC is taking over 103 Galeria Kaufhof stores in Germany, including 59 properties in prime inner-city locations that are part of the Galeria Real Estate portfolio.
As part of the transaction, HBC is also acquiring 16 Sportarena stores, 16 Galeria Inno department stores located in Belgium, as well as various logistics centres, warehouses and other properties including the Galeria Kaufhof head office in Cologne.
HBC said it plans to work with Galeria Kaufhof’s existing management team “to further strengthen offerings to consumers. The agreement includes “extensive commitments to maintain employment levels and store count”. Galeria Kaufhof has 21,500 employees in Germany and Belgium.
HBC CEO Jerry Storch said: “This transaction is a significant step forward in our plans to become a premier global retailer. We look forward to working with GALERIA Kaufhof’s management team as we bring together two geographically complementary businesses, diversifying HBC’s revenue base with leading banners in Canada, the United States, Germany and Belgium. This is a strong foundation to explore additional opportunities for growth throughout the continent.”
HBC’s executive chairman Richard Baker said: “This is an exciting transaction that demonstrates our proven growth formula in action, and it is the right investment and the right time. We have been carefully surveying the European retail landscape for many years for a potential expansion opportunity and have watched Galeria Kaufhof build on its exceptional real estate to become the number one department store in Germany.”
Metro chief executive Olaf Koch added: “HBC pursues a strategy of international growth and Galeria Kaufhof plays a central role in this expansion.”
Metro said the deal will allow it to reduce net debt by €2.7bn, foresees a roughly €700m boost to pre-tax earnings and a positive cash inflow of around €1.6bn.
As a result of the acquisition, HBC will have 464 stores worldwide from eight banners also including Hudson’s Bay, Lord & Taylor, Saks Fifth Avenue, Saks Off 5th and Home Outfitters. Pro forma sales by market will be: 44% US; 31% Germany 23% Canada, 2% Belgium.
When combined with HBC’s current portfolio of iconic store banners, HBC will operate 464 stores under 8 banners, with 44% of sales generated in the United States, 31% in Germany, 23% in Canada and 2% in Belgium.