Canadian Hudson’s Bay and Austrian Sigma Holding have not reached a preliminary agreement about the merger of their respective department store chains Kaufhof and Karstadt: the Canadian company says it has only signed a letter of intent.
“Merger among equals”
Last year, the Austrians offered 3 billion euro for the control over a joint venture which would merge Karstadt (eighty stores in Germany) and Kaufhof (around a hundred stores). That offer was turned down, but last month it became clear that both parties found themselves negotiating again. Now German media reported a "merger among equals", without more details, however in an statement Hudson's Bay denied these rumours and instead says the two companies have signed a "non-binding letter of intent with respect to the exploration of a potential joint venture".
Both chains struggle because of the rise of companies like Primark and Zalando: Kaufhof has been publishing nothing but turnover decreases and losses for years, while Karstadt has just turned the corner with a first net profit in twelve years in 2017. As the chains are both present in a great number of German cities, many employees fear a significant numer of stores may be closed. Some insiders were quoted as saying that fifteen onerous stores would have to close, others claim up to thirty may be in jeopardy.