(Bloomberg) -- Austrian property developer Rene Benko is taking a second run at consolidating Germany's dusty department stores, making an unsolicited bid for the Kaufhof chain now owned by Toronto-based Hudson's Bay Co.
A spokesman for Benko's Signa Holding GmbH confirmed Thursday that it had offered to buy Kaufhof, without providing details, after the Canadian company said on Wednesday that it received “an incomplete, nonbinding and unsolicited offer with no evidence of financing.”
A deal would combine Kaufhof with competitor Karstadt, which Signa already owns, speeding a consolidation of bricks-and-mortar shopping in Germany. The Austrian, based in the Alpine city of Innsbruck, tried to buy Kaufhof in 2015 but lost out to Hudson's Bay as then-owner Metro AG agreed to the sale after years of subpar profitability.
The main value in the deal was Kaufhof's property in some of Germany's most famous shopping areas. Both that chain and Karstadt, former fixtures of the country's downtowns, have lost ground to more focused retailers and e-commerce players such as Amazon.com Inc. Signa also owns the building that houses Berlin's landmark KaDeWe department store.
Signa submitted a fully financed bid of 3 billion euros ($3.49 billion) for Kaufhof and expects a response from Hudson's Bay by Nov. 15, according to a person familiar with the matter, who requested anonymity because the offer hasn't been made public. Hudson's Bay paid 2.83 billion euros for Kaufhof.
Kaufhof says it has 96 stores in Germany, plus 16 in Belgium, while Karstadt has 83 in Germany, according to its website. “It's clear you'd have to review such a project diligently,” said Kay Weidner, a spokesman for Germany's Federal Cartel Office, though he added that no filing has yet been made with the authority.
Lord & Taylor
Hudson's Bay, which owns Saks Fifth Avenue in the U.S., said Wednesday that its board would review the Signa offer “in due course.” A sale would bolster the company's balance sheet in the wake of the Oct. 24 deal to sell the venerable Lord & Taylor department-store building in New York and would drastically shrink the retailer, which gets about a third of its revenue from Europe.
“As we've previously stated, our European business is an important element of the company's strategy,” Hudson's Bay said in a statement.
Hudson's Bay, which is in search of a new chief executive officer, has been cutting thousands of jobs as it copes with an industrywide slump for department stores. It said this week it was considering putting its prime location in Vancouver on the market.
Hudson's Bay is also under pressure from activist investor Jonathan Litt of Land & Buildings Investment Management, who is urging the company to monetize some of its real estate holdings.
In a statement Wednesday, Litt urged shareholders to “seriously consider” the Signa offer, calling it “the optimal and lowest-cost option for raising capital.” The offer “further underscores the real estate value of the company,” he said.
Reuters was first to report Signa's offer for Kaufhof.
--With assistance from Allison McNeely and Karin Matussek
To contact the reporters on this story: Scott Deveau in New York at sdeveau2@bloomberg.net, Sandrine Rastello in Montreal at srastello@bloomberg.net, Richard Weiss in Frankfurt at rweiss5@bloomberg.net.
To contact the editors responsible for this story: Nick Turner at nturner7@bloomberg.net, Eric Pfanner, John J. Edwards III
©2017 Bloomberg L.P.
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