Business

Austrian firm makes bid for HBC's Galeria Kaufhof of Germany

Shares of Hudson's Bay Co. jumped Wednesday on news that Austrian firm Signa Holding made a 3 billion euro ($4.5 billion Cdn) bid for HBC's German department store chain Galeria Kaufhof.

HBC bought Kaufhof in 2015

The logo of the Galeria Kaufhof department store is pictured in downtown Frankfurt in this January 2012 photo. (Kai Pfaffenbach/Reuters)

Shares of Hudson's Bay Co. jumped Wednesday on news that Austrian firm Signa Holding made a 3 billion euro ($4.5 billion Cdn) bid for HBC's German department store chain Galeria Kaufhof.

Reuters initially reported the bid Wednesday, citing unnamed sources. Signa is the parent company of Karstadt, another German department store chain that is a chief competitor to Kaufhof.​

Investors responded by sending HBC shares up more than nine per cent to close at $12.29 on the TSX.

HBC confirmed it has received an "incomplete, non-binding and unsolicited offer" from Signa to acquire Kaufhof and other real estate assets. HBC said its board intends to review the offer.

"As we've previously stated, our European business is an important element of the company's strategy," HBC said, adding that remains focussed on the upcoming holiday season.

 ​HBC acquired 103 Kaufhof stores and Belgian subsidiary Inno in 2015 in a $3.9 billion deal.

In early September of this year, HBC indicated that it wasn't interested in selling Kaufhof amid reports that Signa was considering a bid for the German chain.

Word of the bid comes as HBC has been working on selling off some of its North American real estate holdings.

On Oct. 24, HBC said it had struck a deal to sell Lord & Taylor's flagship store in New York for $1 billion to office-sharing company WeWork, which will move into some space in the retailer's other properties.

Earlier this week, HBC also said it was eyeing the sale of its flagship store in Vancouver.

Pushed by activist investor

The real estate moves come after a minority shareholder, Land & Buildings Investment Management, put pressure on the retailer to monetize its holdings.

In a letter Wednesday to shareholders, Land & Buildings said the company should "seriously consider" the bid for Kaufhof.

"Selling properties at or above the company's stated (net asset value) is likely the optimal and lowest cost option for raising capital -- and further underscores the real estate value of the company," the letter says.

In addition, Wednesday marked the departure date of HBC CEO Jerry Storch. The company announced on Oct. 20 that Storch was leaving HBC to return to his firm, Storch Advisors. 

Richard Baker, HBC's governor and executive chairman, who had previously served as CEO, reassumed the role while the company conducts a search for a new top executive.

with files from The Canadian Press

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