Hudson’s Bay goes global, will buy German department store chain from Metro

Toronto, Canada —Hudson’s Bay Company (HBC) is positioning itself for major global expansion with the purchase of the 15-year-old Galeria Kaufhof department store chain from German retail conglomerate Metro Group for about $3.17 billion. The planned purchase includes 103 Galeria Kaufof stores in Germany, as well as 16 German Sportarena stores and 16 Galeria Inno department stores in Belgium.

If the transaction is completed, Hudson’s Bay will have combined annual sales of 13 billion Canadian dollars, or about $10.6 billion, and a third of its sales will come from Belgium and Germany.

Other assets included in the purchase include various logistics centers and warehouses, as well as the Galeria Kaufof headquarers in Cologne, Germany. The transaction further diversifies HBC’s portfolio and gives the Canadian company a major presence outside its North American base.

“This is an exciting transaction that demonstrates our proven growth formula in action, and it is the right investment and the right time,” said Richard Baker, executive chairman of HBC, whose U.S. holdings include Saks Fifth Avenue and Lord & Taylor. “We have been carefully surveying the European retail landscape for many years for a potential expansion opportunity and have watched Galeria Kaufhof build on its exceptional real estate to become the number one department store in Germany. We are excited to work with the Galeria Kaufhof management team to leverage our expertise, and we welcome Galeria Kaufhof to our portfolio of dynamic brands.”

As part of the agreement, HBC will continue to operate Galeria Kaufhof, Inno and Sportarena under their current banners. No significant changes are currently anticipated to store footprints or staffing levels, and Galeria Kaufhof will remain headquartered in Cologne. HBC will operate 464 stores under eight banners. Forty-four percent of sales will be generated in the U.S., 31% in Germany, 23% in Canada and 2% in Belgium.

“With Hudson’s Bay Company, we have found the ideal partner for a successful future of Galeria Kaufhof,” said Olaf Koch, Chairman of Metro’s management board. “HBC pursues a strategy of international growth and Galeria Kaufhof plays a central role in this expansion. Beyond the attractive financial and transactional aspects, a key factor for us was the fact that HBC has made binding guarantees to take on the approximately 21,500 employees in Germany and Belgium.”

Galeria Kaufhof’s existing management team is expected to remain in place, and will work with HBC on efforts such as expanding the Galeria Kaufhof brand, growing e-commerce; optimizing key merchandise categories; introducing the Saks Fifth Avenue and the Saks Off 5th banners in Germany and Belgium, and improving productivity and optimize floor space in Galeria stores.

Metro Group said it decided to sell its department store subsidiary because it wants to focus more strongly on its Metro Cash & Carry wholesale business, its Media-Saturn consumer electronics division and its Real hypermarket chain.

The boards of directors of HBC and the Supervisory Board of METRO AG have approved the transaction. It is expected to close by the end of the third quarter of 2015.