Canadian retailer Hudson’s Bay Company (HBC) and retail estate business Signa Holding have announced the successful completion of a deal to merge their respective retail operations and the formation of the companies’ real estate joint venture.
The move, which was first announced in September, was given the green light last month and sees the firms merge their respective HBC Europe and Karstadt Warenhaus GmbH’s retail operations as part of a bid to compete more effectively against e-commerce players.
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It creates what is understood to be Germany’s leading retailer with 243 locations, 32,000 employees, and annual revenue in excess of EUR5bn (US$5.66bn), 49.99% of which will be owned by Canada’s Hudson’s Bay Company (HBC), while retail estate business Signa Holding, the owner of Karstadt, will own the remainder.
“Combining HBC Europe with Karstadt creates a stronger, better-capitalised retailer well-positioned to succeed in the German market,” says HBC CEO Helena Foulkes. “This transaction creates significant value for our shareholders and continues the bold actions we are taking to strengthen our business. Over the past year, in addition to this transaction, we have sold Gilt, sold the Lord & Taylor flagship to WeWork and rightsized the Lord & Taylor business, and put in place new, experienced leaders in key areas.
“Looking ahead, the creation of a stronger operator in Europe allows us to focus our attention on our North American business, ensuring we are making the right strategic decisions to continue to drive profitability and performance and best capitalise on our exceptional real estate assets.”
The agreement also includes the sale of 50% of the European real estate portfolio of HBC to Signa as approved by the real estate lending syndicate, led by Landesbank Baden-Wurttemberg, which holds the loan on certain HBC Europe real estate.
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By GlobalDataIn connection with the closing, which took place on Friday (3 November), HBC received proceeds of EUR171m, which it says will be used to permanently repay a portion of its term loan. The retailer expects to receive additional proceeds of EUR250m following the sale of a 50% interest in 18 additional properties in Germany expected to close in January. The transactions value HBC’s German real estate assets at a total of EUR3.25bn (CAD4.88bn) compared to the company’s total Galeria Kaufhof purchase price of EUR2.51bnn (CAD3.77bn) in 2015.
“This transaction generates substantial proceeds for HBC and is a clear example of our ability to execute on our long-term real estate strategy, centered on capitalising on our world-class portfolio through opportunistic monetisations, strategic partnerships, and enhancing the credit profile of our tenants,” adds Richard Baker, HBC’s governor and executive chairman. “As we look ahead, we will continue to take strong actions to strengthen our company and deliver value for our shareholders.
“This transaction demonstrates the significant value of our German real estate portfolio, which exceeds the 2015 purchase price we paid by CAD1.1bn. The German real estate joint venture will continue to seek out opportunistic ways of unlocking value in the future.”
