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Report: Germany's largest department stores agree to merge

Galeria Kaufhof, owned by department store operator Hudson's Bay Co., and SIGNA Holding GmbH-held Karstadt have agreed to merge, Reuters reported Sept. 6, citing several sources close to the deal.

The deal will combine Germany's two largest department store chains. Under the terms of the deal, Signa will own 51% of the new business, which will be led by Stephan Fanderl, the current managing director of retail at Signa, according to the Reuters report.

Hudson's Bay and Signa did not immediately respond to S&P Global Market Intelligence's request for comment.

The Wall Street Journal previously reported that Hudson's Bay had agreed to sell half of its European business to Signa for €1.1 billion in cash plus €750 million in debt. Hudson's Bay confirmed at the time that it was in discussions with Signa, but rebuffed reports that it had agreed to sell or combine its European business.

Hudson's Bay rejected an earlier Signa offer to buy its German department store chain. In February, Hudson's Bay said a €3 billion offer for Kaufhof substantially undervalued the department store chain.

The merger could result in job losses at Kaufhof ranging from 5,000 to 20,000, with the remaining employees facing pay cuts, Reuters reported, citing German newspaper Süddeutsche Zeitung. Job losses are also expected at both companies' headquarters, according to the report.