It’s no new story that Benko Retail, the operator of Karstadt department stores in Germany, is eager to acquire its competitor Galeria Kaufhof. Since 2011, the Austrian Benko group has been interested in buying Kaufhof from its parent company Metro. The retail and cash and carry giant has refused, while letting it be known that it does not necessarily see Kaufhof as a strategic asset.
According to the German newspaper Handelsblatt, Benko has now made a formal, written offer to Metro to try to persuade it to sell. The price is rumored to be something just under €3 billion or a little lower than annual turnover. Benko sees great potential in a merger, since one headquarter could be run more efficiently and economically than two. What is more, the two chains have overlaps at locations in certain German city centers where one department store would do instead of two.
Last week, Karstadt announced that it would shut down five more stores reducing the total number of outlets to 78 next year. Meanwhile, management announced that it had no plans to reduce the number of shops further. Instead, it aims to expand its more profitable product categories, including sporting goods.